small cap index rfp - fin news€¦ · i. project overview a. introduction; statement of purpose...

Revised: August 2014

REQUEST FOR PROPOSALS for a

Domestic Small Cap Equity Index Manager for the

Sinking Fund Commission of the

CITY OF PHILADELPHIA

Issued by:

THE CITY OF PHILADELPHIA Sinking Fund Commission

All proposals must be submitted electronically to the correct contract opportunity

established for this RFP (identified by opportunity number), through the eContract Philly online application process at www.phila.gov/contracts, choose eContract Philly.

Applicants who have failed to file complete applications through the eContract Philly online application process will not be considered for the contract.

Proposals must be received no later than 5:00 p.m. Philadelphia, PA, local time,

On December 4, 2015

Michael A. Nutter, Mayor

Charles C. Jones, Executive Director


Table of Contents I. Project Overview

A. Introduction; Statement of Purpose B. Commission Overview C. Project Background D. General Disclaimer of the City of Philadelphia

II. Scope of Work

A. Project Details B. Organizational Requirements C. Services and Tangible Work Products D. Hours and Location of Work E. Monitoring; Security F. Reporting Requirements G. Specific Performance Standards H. Cost Proposal I. Personnel Requirements J. Technology Capabilities K. Alternative Solutions

III. Proposal Format, Content, and Submission Requirements; Selection Process

A. Proposal Format B. Notice to Applicants to State Requested Exceptions to Contract Terms in Proposal C. Office of Economic Opportunity – Participation Commitment/Diversity Reports D. The Philadelphia Tax and Regulatory Status and Clearance Statement E. Compliance with Philadelphia 21st Century Minimum Wage and Benefits Ordinance F. Certification of Compliance with Equal Benefits Ordinance G. Local Business Entity or Local Impact Certification H. Mandatory Online Application Requirements I. Selection Process

IV. Proposal Administration

A. Procurement Schedule B. Questions Relating to the RFP C. Interviews; Presentations D. Term of Contract

V. General Rules Governing RFPs/Proposals; Reservation of Rights, Confidentiality and Public

Disclosure A. Revisions to RFP B. City Employee Conflict Provision C. Proposal Binding D. Contract Preparation Fee E. Reservation of Rights F. Confidentiality and Public Disclosure


Appendices Appendix A1 – Investment Management Agreement Appendix A2 – Statement of Investment Guidelines Appendix A3 – Sandy Hook Principles Appendix B – Office of Economic Opportunity, Antidiscrimination Policy – Minority, Woman and

Disabled Owned Business Enterprises Appendix B-1 – Antidiscrimination Policy and Solicitation for Participation and

Commitment Form Appendix B-2 – Special Antidiscrimination Requirements Applicable to Nonprofit

Organizations and Diversity Report of Nonprofit Organizations Form Appendix C – City of Philadelphia Tax and Regulatory Status and Clearance Statement Appendix D – Local Business Entity or Local Impact Certification Exhibit A- Quantitative and Performance Metrics Questionnaire Gallagher Fiduciary Advisors Due Diligence Questionnaire

Revised: August 2014 1

I. Project Overview A. Introduction; Statement of Purpose This Request for Proposal (“RFP”) is being issued by the Sinking Fund Commission (“Commission”) for the purpose of engaging investment managers (“managers”) to manage a domestic small cap equity index separately managed account for the PGW Pension Plan. Currently, the portfolio is $23 million and is actively managed. The total amount of the Plan is approximately $489 million as of September 11, 2015. The Plan is comprised of 66% foreign and domestic equities and 34% domestic fixed income and cash. The portfolio must adhere to the Plan’s investment policy and the Sandy Hook Principles which are part of this RFP. The Commission will consider a separately managed account as well as a mutual fund or commingled pool as long as the product proposed can comply with the policy and the Principles. B. Commission Overview The Commission is vested with exclusive authority and discretion to invest and manage the retirement funds for the Plan. The Commission is comprised of three voting members, including the Chairman who is appointed by the Mayor, the City Controller (an elected official), and the Director of Finance (also a Mayoral appointment). The Commission has a Staff of two, the Chief Investment Officer (“CIO”) and the Executive Director. Gallagher Fiduciary Advisors, LLC (“consultant”) acts as the investment consultant for the Commission. Wells Fargo Bank, NA is the custodian (“custodian”) for the Plan. The Commission’s primary duties include, but are not limited to, the following:

1. To serve as a custodian of the Plan’s retirement funds and to manage them on an actuarially sound basis;

2. To act as fiduciaries of the Plan’s retirement funds solely in the interest of the participants and beneficiaries;

3. To select and retain competent investment managers, where required, that will execute investment strategies designed to achieve the Commission’s investment objectives, and to monitor investment performance; and

4. To plan and implement investment strategies as required. C. Request for Proposals The Commission desires to receive proposals from potential managers for the services sought by the RFP. The Commission expects to select one firm for the mandate but reserves the right to select more. D. General Disclaimer of the City II. This RFP does not commit the City of Philadelphia to award a contract. This RFP and the process it describes are proprietary to the City and are for the sole and exclusive benefit of the City. No other party, including any Applicant, is intended to be granted any rights hereunder. Any response, including written documents and verbal communication, by any Applicant to this RFP, shall become the property of the City and may be subject to public disclosure by the City, or any authorized agent of the City. The City is not liable for any costs incurred by Applicants in preparing and submitting a proposal in response to this RFP or for any costs and expenses incurred in meeting with, or making oral presentations to the City if so requested.


II. Scope of Work A. Project Details The Commission’s objectives for this project include the following:

Engage an investment manager to manage a Domestic Small Cap Equity Index

Separately Managed Account to match the performance of the Russell 2000 index in accordance with the Plan’s investment policy (Appendix A2) and the Sandy Hook Principles (Appendix A3) adopted in March 2013. The Commission will consider a separately managed account as well as a mutual fund or a commingled pool but notes that any vehicle must be able to be in compliance with the Commission’s investment restrictions [e.g., Sandy Hook Principles] & other required specifications

The Applicant’s proposal should address each specific objective and describe in detail how the Applicant will achieve the objective, or how the Applicant will enable the Commission to achieve the objective. This Section II, Scope of Work states requirements for the project, including the services and the tangible work products to be delivered, and the tasks the Commission has identified as necessary to meet those requirements. The Commission reserves the right, however, to modify specific requirements, based on changed circumstances (such as a change in business or technical environments), the proposal selection process, and contract negotiations with the Applicant(s) selected for negotiations, and to do so with or without issuing a revised RFP. The Applicant must provide in its proposal a detailed proposed scope of work showing how it will meet the project requirements stated in this Section II. B. Organizational Requirements Set forth below are the minimum requirements that a prospective manager must meet in order to be considered for the opportunity presented hereby. Required qualifications will be strictly enforced. Firms/Products that do not meet the minimum qualifications will not be considered. 1. SEC registration under the Investment Company Act of 1940 and state Blue Sky Laws, as required or codified exemption to registration. 2. The proposed product must be offered in a separate account, however a mutual fund or a commingled pool will be considered if it meets the other specifications. 3. The prospective manager must update data for the firm and its proposed product/products with PSN Informas as of September 30, 2015 and complete a due diligence questionnaire with Gallagher Fiduciary Advisors. 4. In general, except for managers granted dispensation as Diversity and Female Managers, a minimum of five years of firm experience in the management of institutional assets, specifically in


the product. Three of these years may represent experience by individuals whom had previously been with other firms, provided there is a contractual representation that individuals utilizing experience from other firms are directly involved with the management of the Fund's assets. 5. Additionally, experience with and current client mandates with allocation of funds of a size similar to that to be invested on behalf of the Fund. Prospective managers must have at least $1 billion in firm wide assets and $300 million in product assets for this Notice of Contracting Opportunity, prior to any investment by the Commission. In general, except for managers granted dispensation as Diversity and Female Managers, the Fund does not desire to represent more than 10% of the assets managed by the firm and more than 20% of the assets invested in the particular product. These tests shall be applied at the time of engagement and reviewed at each quarterly manager review. 6. Responding firms may be required to submit financial statements at a future date. Firms which fail to submit financial statements upon request will be eliminated from consideration. The dispensations granted in the provision to Diversity and Female Managers are as follows: 1. A minimum of three years of firm experience in the management of institutional assets, specifically in the product. Two of these years may represent experience by individuals whom had previously been with other firms, provided there is a contractual representation that individuals utilizing experience from other firms are directly involved with the management of the Fund's assets. 2. In general, the Fund will accept representing up to 25% of the assets managed by the firm and up to 60% of the assets invested in the particular product. These tests shall be applied at time of engagement and reviewed at each quarterly manager review. For the purposes of this opportunity, in order to be considered, Diversity Managers must have at least $500 million in firm assets and $200 million in assets under management within the product which is being proposed for this Notice of Contracting Opportunity prior to any investment by the Commission. C. Services and Tangible Work Products

1. Services The Commission requires at least the services listed below, including the specific tasks

and work activities described. Applicant’s proposed scope of work should state in detail how it will carry out each task, including the personnel/job titles (as identified in Section II-I, Personnel Requirements) responsible for completing the task. For each service specified, the Applicant should propose criteria to determine when the tasks comprising the service are satisfactorily completed. Applicants may propose additional or revised tasks and activities, but should explain why each is necessary to achieve the project objectives.

Manage a Small Cap Equity Index Separately Managed Account in the manner

described herein.

2. Tangible Work Products The Commission requires completion and delivery of at least the tangible work products

listed below. The proposed scope of work should state in detail how the Applicant will produce each work product, including the personnel/job titles (as identified in Section II-I, Personnel Requirements), that will be responsible for delivering the work product. For each work product,


the Applicant should propose criteria for satisfactory completion and delivery. Applicants may propose additional or revised tangible work products, but should explain why each is necessary to achieve the project objectives.

Regular, routine reporting of portfolio balances and results to the Commission, the consultant, and the custodian.

D. Hours and Location of Work

The Staff, consultant and the custodian work approximately 9:00 AM to 5:00 PM, Monday to Friday. The Commission meets at least quarterly in February, May, September, and November (subject to change). E. Monitoring; Security By submission of a proposal in response to this RFP, the Applicant agrees that it will comply with all contract monitoring and evaluation activities undertaken by the City of Philadelphia, and with all security policies and requirements of the City. F. Reporting Requirements The successful Applicant shall report to the City of Philadelphia on a regular basis regarding the status of the project and its progress in providing the contracted services and/or products. The successful Applicant shall report to the City of Philadelphia and to the consultant on a regular basis regarding the performance of the Commission’s portfolio. G. Specific Performance Standards The City reserves the right to reject any item of work that does not meet the Commission’s minimum standards of performance and quality, or that does not conform to the contract scope of work. The City shall not be obligated to pay for rejected work. H. Cost Proposal Applicants must provide a detailed cost proposal, with a line-item breakdown of the costs for specific services and work products proposed. Cost proposals must be “fixed price” proposals. The proposed price must include all costs that will be charged to the City for the services and tangible work products the Applicant proposes to perform and deliver to complete the project and including, but not limited to, costs for the following, if the Commission is to pay for them: employee compensation and fringe benefits; communication; printing; administrative expenses; bonding; acquisition of real estate; rent, utilities, maintenance and security related to real estate; travel (reimbursable only at rates approved by the Commission and in accordance with current City policies, which can be obtained from the Commission); project management; development; testing; implementation; maintenance; training; and all other work proposed. Any contract


resulting from this RFP will provide for a not-to-exceed amount in the compensation section of the contract. I. Personnel Requirements The proposal must identify all personnel who will perform work on the project, by education level, skill set (described in detail), experience level, and job title. Brief biographies of all personnel so identified should be included in Applicant’s proposal. J. Technology Capabilities The successful Applicant will be responsible for having and using the following technology capabilities and resources in performing the work: Microsoft Word, Microsoft Excel, Adobe Acrobat, and email. The selected candidate should have the ability to communicate with City personnel via a number of different media, including electronically free of any viruses or other harmful items. K. Alternative Solutions If an Applicant offers options and/or alternative solutions that are not requested in this RFP or are not included in its proposed prices, the Applicant must provide the following information for each:

A detailed description of the option/alternative solution (including, but not limited to, all features, functionality, and/or services that will be unavailable if the option/alternative is not purchased);

If not included in the proposed prices, a full explanation of the rationale for not including;

Detailed cost information for each option/alternative, in accordance with the cost proposal requirements of the RFP.

III. Proposal Format, Content, and Submission Requirements; Selection Process A. Proposal Format Proposals submitted in response to this RFP must include the following information, in the sections and order indicated:

1. Cover Letter signed by the person(s) authorized to issue the proposal on behalf of the Applicant.

2. Table of Contents 3. Introduction/Executive Summary 4. Complete summary of quantitative data and performance metrics. See exhibit A 5. Applicant Profile

Provide a narrative description of the Applicant itself, including the following: a. Applicant’s business identification information, including name, business address,

telephone number, website address, and federal taxpayer identification number or federal employer identification number;

b. A primary contact for the Applicant, including name, job title, address, telephone and fax numbers, and email address;


c. A description of Applicant’s business background, including, if not an individual, Applicant’s business organization (corporation, partnership, LLC, for profit or not for profit, etc.), whether registered to do business in Philadelphia and/or Pennsylvania, country and state of business formation, number of years in business, primary mission of business, significant business experience, whether registered as a minority-, woman-, or disabled-owned business and with which certifying agency, and any other information about Applicant’s business organization that Applicant deems pertinent to this RFP.

6. Project Understanding Provide a brief narrative statement that confirms Applicant’s understanding of, and

agreement to provide, the services and/or tangible work products necessary to achieve the objectives of the project that is the subject of this RFP. Applicant shall describe how the Applicant’s business experience will benefit the project.

7. Proposed Scope of Work Provide a proposed scope of work, including a cost proposal and project timetable

(schedule), in accordance with Section II, “Scope of Work,” of this RFP. 8. References

Provide at least three references, preferably for projects that are similar in type, scope, size and/or value to the work sought by this RFP. If applicable, Applicant should provide references for projects with other municipalities that are similar in size to the Plan. For each reference, include the name, address and telephone number of a contact person.

9. Proposed Subcontractors State the intention to use subcontractors to perform any portion of the work sought by

this RFP. For each such subcontractor, provide the name and address of the subcontractor, a description of the work Applicant intends the named subcontractor to provide, and whether the subcontractor can assist with fulfilling goals for inclusion of minority, woman, or disabled-owned businesses as stated in Appendix B. Note that if subcontractors at any tier may perform services arising directly out of a City contract resulting from this RFP, Applicants must inform them of the City’s minimum wage and benefits requirements and must require them to comply with such requirements.(See Section III.F for more information.)

10. Requested Exceptions to Contract Terms State exceptions, if any, to City Contract Terms that Applicant requests, including the

reasons for the request and any proposed alternative language. (See Section III.B for more information.)

11. Office of Economic Opportunity - Solicitation for Participation and Commitment Form/Diversity Report of Nonprofit Organizations As a separate document, Applicants must include a completed Solicitation for

Participation and Commitment Form when responding to an RFP that contains ranges for the participation of M/W/DSBEs. The form is provided with Appendix B-1 to this RFP. If Applicant is a nonprofit organization, such applicants must include a completed “Diversity Report of Nonprofit Organizations” on the form provided with Appendix B-2 of this RFP. If the Nonprofit Organization is responding to an RFP that contains ranges, in addition to the Diversity Report of Nonprofit Organizations, it must also submit a Solicitation for Participation and Commitment Form. (See Section III.C for more information.)

12. Tax and Regulatory Status and Clearance Statement Include a statement, in the form requested in Appendix C, attesting to Applicant’s tax and

regulatory compliance with the City. (See Section III.D for more information.)


13. Disclosure of Litigation; Disclosure of Administrative Proceedings State, for the 5-year period preceding the date of this RFP, a description of any judicial or

administrative proceeding that is material to Applicant’s business or financial capability or to the subject matter of this RFP, or that could interfere with Applicant’s performance of the work requested by this RFP, including, but not limited to, any civil, criminal or bankruptcy litigation; any debarment or suspension proceeding; any criminal conviction or indictment; and any order or agreement with or issued by a court or local, state or federal agency. For each such proceeding, state the name of the case or proceeding, the parties involved, the nature of the claims involved, its current status and the final disposition, if any. Provide the same information for any officer, director, principal, or partner of Applicant’s organization, and for any subcontractor Applicant plans to use to perform the services described in this RFP.

14. Statement of Financial Capacity Provide documentation demonstrating fiscal solvency and financial capability to perform

the work sought by this RFP. Consider providing one or more of the following: General statement of the Applicant’s financial condition; Applicant’s most recent audited or unaudited financial statements; Disclosure of any bankruptcy filings over the past five years; Most recent IRS Form 990 (for non-profit organizations only).

15. Local Business Entity or Local Impact Certification. (Optional if applicable to Applicant) If applicable, Applicant may elect to provide the certification statement in the form of

Appendix D as to Applicant’s status as a Local Business Entity or its local impact if awarded the contract. (See Section III.G for more information.)

16. Disclosure Requirements Disclose all information required under Chapter 17-1400 of the Philadelphia Code,

including any local and state political campaign contributions, on the forms provided through eContract Philly. (See Section III.H for more information.)

17. Defaults Provide a description, in detail, of any situation occuring within the past five (5) years in

which the Applicant, or a joint venture or partnership of which Applicant was a part, defaulted or was deemed to be in noncompliance of any contractual obligations, explaining the issues involved in the default, the outcome, the actions taken by Applicant to resolve the matter. Also provide the name, title and telephone number of the party to the contract who asserted the event of default or noncompliance or the individual who managed the contract for that party. 18. Statement of Anticipated Job Creation Applicant shall provide a narrative description on whether and how a contract award based on its proposal will result in new job creation within the following: 1) City of Philadelphia; 2) Philadelphia Metropolitan Statistical Area; 3) Commonwealth of Pennsylvania; 4) United States of America. For each job anticipated, the Applicant shall describe the following: job title, job description, educational qualifications, and anticipated annual salary or anticipate annual hourly rate. Although not part of this RFP, it is requested that you complete the Gallagher Fiduciary Advisors Questionnaire included in this RFP and deliver the completed document to the persons noted on the form. B. Notice to Applicants to State Requested Exceptions to Contract Terms in Proposal


The City’s standard contract terms and conditions for services of the type sought by this contracting opportunity (Contract Terms) are set forth in the Investment Management Agreement attached to this RFP as Appendix A1. By submitting a proposal in response to this contract opportunity, the Applicant agrees that, except as provided herein, it will enter into a contract with the City containing substantially the Contract Terms. Applicants must state clearly and conspicuously any modifications, waivers, objections or exceptions they seek (“Requested Exceptions”) to the Contract Terms in a separate section of the proposal entitled “Requested Exceptions to Contract Terms.” For each Requested Exception, the Applicant must identify the pertinent Contract Term by caption and section number and state the reasons for the request. The Applicant must also propose alternative language or terms for each Requested Exception. Requested Exceptions to the City’s Contract Terms will be approved only when the City determines in its sole discretion that a Requested Exception makes business sense, does not pose unacceptable risk to the City, and is in the best interest of the City. By submitting its proposal, the Applicant agrees to accept all Contract Terms to which it does not expressly seek a Requested Exception in its proposal. The City reserves the right, in its sole discretion, to evaluate and reject proposals based in part on whether the Applicant’s proposal contains Requested Exceptions to Contract Terms, and the number and type of such requests and alternative terms proposed. If, after the City issues its Notice of Intent to Contract to an Applicant, the Applicant seeks Requested Exceptions to Contract Terms that were not stated in its proposal, the City may, in its sole discretion, deny the Requested Exceptions without consideration or reject the proposal. The City reserves the right, in its sole discretion, (i) to waive any failure to comply with the terms of this Notice to Applicants if it determines it is in the best interest of the City to do so; and (ii) to require or negotiate terms and conditions different from and/or additional to the Contract Terms in any final contract resulting from this contract opportunity, without notice to other Applicants and without affording other Applicants any opportunity to revise their proposals based on such different or additional terms. C. Office of Economic Opportunity – Participation Commitment/Diversity Reports Each Applicant is subject to the provisions of Mayoral Executive Order 03-12, the City’s Antidiscrimination Policy for participation by Minority Business Enterprises ("MBE"), Woman Business Enterprises ("WBE") and Disabled Business Enterprises (“DSBE”) (collectively, “M/W/DSBE”) as those terms are defined in Executive Order 03-12. While there are no specific participation ranges established for this RFP, Applicants are required to exercise their “Best and Good Faith Efforts” to provide meaningful opportunities for the participation of M/W/DSBEs in their proposals. Forms, instructions and special contract provisions which explain the requirements of the Antidiscrimination Policy for City contracts in more detail are included in Appendix B-1 to this RFP. Appendix B-1 includes the “Solicitation for Participation and Commitment Form” which Applicants should complete and return with their proposal if


Applicant has solicited and/or made commitments to use M/W/DSBEs as part of its proposal. M/W/DSBEs are also encouraged to respond directly to this RFP. If Applicant is a nonprofit organization, Mayoral Executive Order 03-12 requires nonprofit Applicants to document their diversity policies. Applicants that are nonprofit organizations should refer to the special contract provisions and instructions attached to this RFP as Appendix B-2. Included in Appendix B-2 is the form, “Diversity Report of Nonprofit Organizations,” which should be completed and returned with proposals submitted by nonprofit Applicants even if a nonprofit Applicant is also submitting a “Solicitation for Participation and Commitment” form. D. The Philadelphia Tax and Regulatory Status and Clearance Statement It is the policy of the City of Philadelphia to ensure that each contractor and subcontractor has all required licenses and permits and is current with respect to the payment of City taxes or other indebtedness owed to the City (including, but not limited to, taxes collected by the City on behalf of the School District of Philadelphia), and is not in violation of other regulatory provisions contained in the Philadelphia Code. To assist the City, through its Department of Revenue and Department of Licenses and Inspections, in determining this status, each Applicant is required to submit with its proposal the certification statement entitled City of Philadelphia Tax and Regulatory Status and Clearance Statement which is attached to this RFP as Appendix C. If the Applicant is not in compliance with the City’s tax and regulatory codes, an opportunity will be provided to enter into satisfactory arrangements with the City. If satisfactory arrangements cannot be made, Applicants will not be eligible for award of the contract contemplated by this RFP. The selected Applicant will also be required to assist the City in obtaining the above information from its proposed subcontractors (if any). If a proposed subcontractor is not in compliance with City Codes and fails to enter into satisfactory arrangements with the City, the non-compliant subcontractor will be ineligible to participate in the contract contemplated by this RFP and the selected applicant may find it necessary to replace the non-compliant subcontractor with a compliant subcontractor. Applicants are advised to take these City policies into consideration when entering into their contractual relationships with proposed subcontractors. If an Applicant or a proposed subcontractor is not currently in compliance with the City’s tax and regulatory codes, please contact the Revenue Department to make arrangements to come into compliance at 215-686-6600 or [email protected]. Applicants need not have a City of Philadelphia Business Income and Receipts Tax Account Number (formerly Business Privilege Tax Account Number) and Commercial Activity License Number (formerly Business Privilege License Number) to respond to this RFP, but will, in most circumstances, be required to obtain one or both if selected for award of the contract contemplated by the RFP.1 Applications for a Business Income and Receipts Tax Account

1 Applicants that have a Business Privilege Tax Number should use that number, as it is automatically their Commercial Activity License Number, and need not apply for a new Commercial Activity License Number.


Number or a Commercial Activity License2 may be made on line by visiting the City of Philadelphia Business Services Portal at http://business.phila.gov/Pages/Home.aspx and clicking on “Register Now.” If you have specific questions, call the Department of Revenue at 215-686-6600 for questions related to City of Philadelphia Business Income and Receipts Tax Account Number or the Department of Licenses and Inspections at 215-686-2490 for questions related to the Commercial Activity License. E. Compliance with Philadelphia 21st Century Minimum Wage and Benefits Ordinance Applicants are advised that any contract awarded pursuant to this RFP is a “Service Contract,” and the successful Applicant under such contract is a “Service Contractor,” as those terms are defined in Chapter 17-1300 of the Philadelphia Code (“Philadelphia 21st Century Minimum Wage and Benefits Standard Ordinance”) Any Subcontractor (as defined in the General Provisions attached as an Appendix to this RFP), and any sub-subcontractor at any tier proposed to perform services sought by this RFP, is also a “Service Contractor” for purposes of Chapter 17-1300. If any such Service Contractor (i.e. Applicant and subcontractors at any tier) is also an “Employer,” as that term is defined in Section 17-1302 (more than five employees), and is among the Employers listed in Section 17-1303 of the Code, then during the term of any resulting contract, it is subject to the minimum wage and benefits provisions set forth in Chapter 17-1300 unless it is granted a waiver or partial waiver under Section 17-1304. Absent a waiver, these minimum wage and benefits provisions, which include a minimum hourly wage that is adjusted annually based on the CPI, health care and sick leave benefits, are mandatory and must be provided to Applicant’s employees or the employees of any subcontractor at any tier who perform services related to the City contract resulting from this RFP. Applicants and any subcontractors at any tier proposed by Applicants are strongly encouraged to consult Chapter 17-1300 of the Philadelphia Code,3 the General Provisions, and the About/Minimum Wage and Equal Benefits Ordinances Impacting Some City Contractors links on the eContract Philly home page for further details concerning the applicability of this Chapter to, and obligations it imposes on certain City contractors and subcontractors at any tier. In addition to the enforcement provisions contained in Chapter 17-1300, the successful Applicant’s failure or the failure of any subcontractor at any tier to comply (absent an approved waiver) with the provisions of Chapter 17-1300, or any discrimination or retaliation by the successful Applicant orApplicant’s subcontractors at any tier against any of their employees on account of having claimed a violation of Chapter 17-1300, shall be a material breach of any Service Contract resulting from this RFP. By submitting a proposal in response to this RFP, Applicants acknowledge that they understand, and will comply with the requirements of Chapter 17-1300, and will require the compliance of their subcontractors at any tier if awarded a contract pursuant to this RFP. Applicants further acknowledge that they will notify any subcontractors at any tier proposed to perform services related to this RFP of the requirements of Chapter 17-1300.

Similarly, Applicants with a Business Privilege Tax Account Number should use that number as their Business Income and Receipts Tax Account Number. 2 Commercial Activity Licenses are not typically required for non-profit organizations; however, Business Income and Receipts Tax Account Numbers typically are required. 3 A link to the Philadelphia Code is available on the City’s official web site, www.phila.gov. Click on “City Code and Charter,” located to the bottom right of the Welcome page under the box “Transparency.”


F. Certification of Compliance with Equal Benefits Ordinance If this RFP is a solicitation for a “Service Contract” as that term is defined in Philadelphia Code Section 17-1901(4) (“A contract for the furnishing of services to or for the City, except where services are incidental to the delivery of goods. The term does not include any contract with a governmental agency.”), and will result in a Service Contract in an amount in excess of $250,000, pursuant to Chapter 17-1900 of the Philadelphia Code (see footnote 3 for online access to the Philadelphia Code), the successful Applicant shall, for any of its employees who reside in the City, or any of its employees who are non-residents subject to City wage tax under Philadelphia Code Section 19-1502(1)(b), be required to extend the same employment benefits the successful Applicant extends to spouses of its employees to life partners of such employees, absent a waiver by the City under Section 17-1904. By submission of their Proposals in response to this RFP, all Applicants so acknowledge and certify that, if awarded a Service Contract pursuant to this RFP, they will comply with the provisions of Chapter 17-1900 of the Philadelphia Code and will notify their employees of the employment benefits available to life partners pursuant to Chapter 17-1900. Following the award of a Service Contract subject to Chapter 17-1900 and prior to execution of the Service Contract by the City, the successful Applicant shall certify that its employees have received the required notification of the employment benefits available to life partners and that such employment benefits will actually be available, or that the successful Applicant does not provide employment benefits to the spouses of married employees. The successful Applicant’s failure to comply with the provisions of Chapter 17-1900 or any discrimination or retaliation by the successful Applicant against any employee on account of having claimed a violation of Chapter 17-1900 shall be a material breach of the any Service Contract resulting from this RFP. Further information concerning the applicability of the Equal Benefits Ordinance, and the obligations it imposes on certain City contractors is contained in the General Provisions attached to this RFP and the About/Minimum Wage and Equal Benefits Ordinances Impacting Some City Contractors links on the eContract Philly home page. G. Local Business Entity or Local Impact Certification Pursuant to Mayoral Executive Order No. 04 -12, the City Commission will, in the selection of the successful Applicant, consider whether that Applicant has certified that either (1) Applicant meets the criteria stated in Section 17-109(3)(b) of the Philadelphia Code to qualify as a Local Business Entity or (2) in the performance of the resulting contract, Applicant will employ City residents, or perform the work in the City. Any Applicant who wishes to demonstrate its eligibility for this consideration shall do so by completing, executing and attaching to its application a completed Local Business Entity or Local Impact Certification, the form of which is attached to this RFP as Exhibit D. The Applicant shall then also include in a separate section of the application, labeled “Local Business Entity or Local Impact Certification,” a statement that the Applicant believes it has met the Local Business Entity or Local Impact criteria “as set forth in the attached Local Business Entity or Local Impact Certification.” The City Commission shall deem it a postive factor where the Applicant has, in the City’s sole discretion, met the Local Business Entity or Local Impact criteria. H. Mandatory Online Application Requirements You must apply online in order to be eligible for award of the non-competitively bid contract opportunity described in this RFP; proposals and any other related documents prepared in


response to this RFP will not be considered unless they are filed to the correct contract opportunity established for this RFP (identified by opportunity number), within the prescribed time period, through eContract Philly, which can be accessed on the City’s website at Twww.phila.gov/contracts by clicking on eContract Philly.4 The posting of this RFP on eContract Philly is also referred to as a Notice of Contracting Opportunity. The City requires that any Applicant who establishes an account on eContract Philly and utilizes that account for the purpose of responding to a particular contract opportunity is the same individual or business entity that, if awarded the contract, will enter into and perform the resulting contract with the City. Except in the case of joint ventures, applications posted on eContract Philly from Applicants that purport to be filing an application on behalf of another individual or business entity will not be considered, even if the other business entity is an affiliate of the Applicant. In the case of multiple business entities that if awarded a contract have formed, or intend to form a joint venture to perform the contract, a single business entity may file an application on behalf of all such business entities so long as (i) the filing business entity is or will be a member of the joint venture, (ii) the application is made in the name of the existing or proposed joint venture, (iii) documentation is submitted with the application identifying all business entities that comprise, or will comprise, the joint venture, and demonstrating a binding agreement among those business entities to perform the contract as the joint venture identified in the application (for a joint venture that has not yet been formed, documentation signed by each identified business entity evidencing a commitment to form the joint venture if awarded the contract is sufficient), and (iv) the non-filing business entities are eligible for award of a City contract and make the disclosures required by Chapter 17-1400 of the Philadelphia Code (described in greater detail below) within fourteen (14) days after the joint venture receives notice that it has been awarded the contract. Pursuant to Chapter 17-1400 of the Philadelphia Code, Applicants are required to disclose their campaign contributions to political candidates and incumbents who are running for, or currently serving in, a local (Philadelphia) or state-wide elected office anywhere within the Commonwealth of Pennsylvania (federal campaign contributions are not included); any consultants used in responding to the RFP and contributions those consultants have made; prospective subcontractors; and whether Applicant or any representative of Applicant has received any requests for money or other items of value or advice on particular firms to satisfy minority-, woman- or disabled-owned business participation goals from City employees. This information, as well as a proposal or any other response document required, is part of the online application. For more information, please consult the reference materials found on the website, e-mail [email protected] or call 215-686-4914. Applicants are advised that under Chapter 17-1400 individuals and businesses that make campaign contributions in excess of the amounts set forth in Section 17-1404(1), as periodically adjusted, are ineligible to enter into a City contract or subcontract at any tier. Applicants should

4 The eContract Philly website is compatible with Internet Explorer, Google Chrome and Apple Safari; but the site is not presently compatible with Mozilla Firefox.


take this into consideration in electing to apply for this opportunity or in selecting subcontractors if awarded a contract to perform the work sought by this RFP. At their option, Applicants may require that their subcontractors disclose to the Applicants, the subcontractors’ campaign contributions to political candidates and incumbents who are running for, or currently serving in, a local (Philadelphia) or state-wide elected office anywhere within the Commonwealth of Pennsylvania (federal campaign contributions are not included). Disclosure forms may be found on the Disclosure/Eligibility – Subcontractor Disclosure tab on eContract Philly. Applicants are not required to submit these forms to the City. Applicants who have failed to file complete applications to the correct opportunity – including the online disclosure forms – through the eContract Philly online application process prior to the closing date and time will not be considered for the contract. You are encouraged to start and complete your online application on eContract Philly as early as possible. Please be aware that internet connection speed depends on a variety of factors including: configuration of your computer, configuration of your business or home network, the condition of the wiring at your location, network or internet congestion (available bandwidth). Please prepare and plan accordingly to ensure a timely submission. Your proposal and other application documents will not be considered submitted until you sign the application and click on the “submit” button at the conclusion of the eContract Philly process. It is your responsibility to make sure that you have signed and submitted your complete application to the correct contract opportunity established for this RFP. You can begin uploading (or attaching) your proposal and other application materials at any time. It is especially prudent for you to start uploading your attachments earlier if you have a large number of attachments (e.g. over five documents) or larger-sized attachments (e.g. above 5 MB). Please be advised that the eContract Philly website will not accept documents larger than 8 MB. If you have documents larger than 8 MB, you must separate them into smaller documents in order to successfully upload them to the system. Until you sign and submit your application, your materials are not accessible to any staff with the City of Philadelphia. Once you have signed and submitted your application, your application is accessible only to appropriate contract staff within the City of Philadelphia. You are advised that any individual who signs and submits an application on eContract Philly must be an authorized signatory of the Applicant, authorized to both bind the Applicant to its proposal and to make the disclosures required to complete the eContract Philly process. Therefore, in conjunction with their electronic signatures provided at the conclusion of the submission of their applications online, signatories will be required to certify that they are the Applicant or are employees or officers of the Applicant duly authorized to execute the application and make disclosures on the Applicant’s behalf; and they represent and covenant that, to the best of their knowledge after appropriate inquiry, all of the information and disclosures provided are true and contain no material misstatement or omissions. H. Selection Process


This RFP is not a competitive bid subject to the requirement of Section 8-200 of the Philadelphia Home Rule Charter that award be made to the lowest responsible bidder. Cost to the City is a material factor, but it is not the sole, or necessarily the determining factor, in proposal evaluation. The City may, at its sole discretion, award a contract resulting from this RFP to a person or entity other than the responsible Applicant submitting the lowest price. If the City chooses to award a contract, that contract will be awarded to the Applicant whose proposal the City determines, in its sole discretion, is the most advantageous to the City and in the City’s best interest. The City will base its selection on criteria that include, but are not limited to:

1. Superior ability or capacity to meet particular requirements of contract and needs of the Sinking Fund Commission and those it serves

2. Eligibility under Code provisions relating to campaign contributions 3. Superior prior experience of Applicant and staff 4. Superior quality, efficiency and fitness of proposed solution for the Sinking Fund

Commission 5. Superior skill and reputation, including timeliness and demonstrable results 6. Special benefit to continuing services of incumbent, such as operational difficulties

with transition or needs of population being served 7. Benefit of promoting long-term competitive development and allocation of

experience to new or small businesses, including those owned by minority or disabled persons or by women

8. Lower cost 9. Administrative and operational efficiency, requiring less City oversight and

administration 10. Anticipated long-term cost effectiveness 11. Meets prequalification requirements 12. Applicant’s certification of its Local Business Entity/Local Impact status pursuant to

Executive Order 04-12 If a contract is awarded pursuant to this RFP, in compliance with Section 17-1402 (c) of the Philadelphia Code, a notice will be published on the City’s eContract Philly website (go to http://www.phila.gov/contracts and click on eContract Philly) listing the names of all Applicants and identifying the successful Applicant and the basis for the award to that Applicant. This notice will appear on the City’s website for at least one week before the contract is executed. In no event, however, shall the City Commission or City Agency issuing this RFP be obligated to debrief unsuccessful Applicants as to the basis for its decision not to award a contract to them.


IV. Proposal Administration

A. Procurement Schedule

RFP Posted 10/2/2015 Applicant Questions Due 10/30/2015 Answers Posted on eContract Philly Website 11/6/2015 Proposals Due 12/4/2015 Applicant Interviews, Presentations 1/13/2016 Applicant Selection 1/13/2016 Contract Execution 4/15/2016 Commencement of Work 6/1/2016

The above dates are estimates only and the City reserves the right, in its sole discretion, to change this schedule. Notice of changes the due date for Applicant questions, and the date for proposal submission will be posted on the City’s website at www.phila.gov\contracts (click on eContract Philly). The other dates/times listed may be changed without notice to prospective Applicants.

B. Questions Relating to the RFP All questions concerning this RFP must be submitted in writing via email to Matthew Mazza [email protected] and Christopher DiFusco at [email protected] no later than Friday, October 30, 2015, at 5:00 PM, Eastern Time and may not be considered if not received by then. The City will respond to questions it considers appropriate to the RFP and of interest to all Applicants, but reserves the right, in its discretion, not to respond to any individual question. Responses will be posted on the City’s website at www.phila.gov\contracts (click on eContract Philly and go to the Opportunity Details page for this notice of contracting opportunity). Responses posted on the City’s website become part of the RFP upon posting. The City reserves the right, in its discretion, to revise responses to questions after posting, by posting the modified response. No oral response to any Applicant question by any City employee or agent shall be binding on the City or in any way considered to be a commitment by the City.

C. Interviews; Presentations As part of the evaluation and selection process, some applicants may be interviewed by and may be required to make presentations to the Commission and/or its Staff . Any costs incurred by the applicant resulting from these interviews and/or presentations are the responsibility of the applicant. Interviews and presentations will be held in Philadelphia, PA.

D. Term of Contract It is anticipated that the initial term of the Contract shall commence on June 1, 2016 (the “Effective Date”) and, unless sooner terminated by the City pursuant to the terms of the Contract, shall expire on May 31, 2017 (the “Initial Term”). The City may, at its sole option, amend the Contract to add up to three (3) additional successive one-year terms (“Additional


Terms”). Except as may be stated otherwise in such amendment, the terms and conditions of this Contract shall apply throughout each Additional Term. V. General Rules Governing RFPs/Proposals; Reservation of Rights and Confidentiality

(a) Revisions to RFP The City reserves the right to change, modify or revise the RFP at any time. Any revision to this RFP will be posted on eContract Philly with the original Opportunity Details. It is the Applicant’s responsibility to check the eContract Philly website frequently to determine whether additional information has been released or requested.

(b) City Employee Conflict Provision City of Philadelphia employees and officials are prohibited from submitting a proposal in response to this RFP. No proposal will be considered in which a City employee or official has a direct or indirect interest.

(c) Proposal Binding By submitting its proposal, each Applicant agrees that it will be bound by the terms of its proposal for a minimum of 180 calendar days from the application deadline for this RFP. An Applicant’s refusal to enter into a contract which reflects the terms and conditions of this RFP or the Applicant’s proposal may, in the City’s sole discretion, result in rejection of Applicant’s proposal.

(d) Contract Preparation Fee Pursuant to Chapter 17-700 of the Philadelphia Code, the successful Applicant must generally pay a contract preparation fee. Regulations promulgated by the City Solicitor currently establish the following schedule of fees for preparation of the initial contract and subsequent amendments, based upon the amounts involved and whether the successful Applicant is a for-profit or nonprofit entity:

Amount of Contract or Amendment

For-Profit Fees Non-Profit Fees

Contract Amendment Contract Amendment $0-$30,000 $50 $50 $50 $50 $30,001-$100,000 $200 $170 $100 $85 $100,001-$500,000 $500 $340 $200 $170 $500,001-$1,000,000 $900 $520 $300 $260 Over $1,000,000 $1,500 $1,000 $500 $500

In its discretion, the Law Department may grant a full or partial waiver of any of the above fees in exceptional cases for good cause shown, such as violation of a grant covenant. Governmental entities are exempt from the fees. The Law Department reserves the right to collect up to twice the stated fee if extensive negotiation is required to reach a final contract with the successful Applicant.


(e) Reservation of Rights

By submitting its response to this notice of contract opportunity as posted on the eContract Philly web site (“eContractPhilly”), the Applicant accepts and agrees to this Reservation of Rights. The term “notice of contract opportunity,” as used herein, means this RFP and includes all information posted on eContract Philly in relation to this “New Contract Opportunity” as published on eContract Philly, including, without limitation, the information posted for this opportunity on the “Detailed Information for Opportunity” page, in the eContractPhilly “Opportunity List,” and including in addition to this RFP, any other document linked to the Detailed Information for Opportunity Page or otherwise displayed on or linked to this notice of contract opportunity. 1. This Notice of Contract Opportunity

The City reserves and may, in its sole discretion, exercise any one or more of the following rights and options with respect to this notice of contract opportunity:

(a) to reject any and all proposals and to reissue this notice of contract opportunity at any time prior to execution of a final contract;

(b) to issue a new notice of contract opportunity with terms and conditions substantially different from those set forth in this or a previous notice of contract opportunity;

(c) to issue a new notice of contract opportunity with terms and conditions that are the same or similar as those set forth in this or a previous notice of contract opportunity in order to obtain additional proposals or for any other reason the City determines to be in the City’s best interest;

(d) to extend this notice of contract opportunity in order to allow for time to obtain additional proposals prior to the notice of contract opportunity application deadline or for any other reason the City determines to be in the City’s best interest;

(e) to supplement, amend, substitute or otherwise modify this notice of contract opportunity at any time prior to issuing a notice of intent to contract to one or more Applicants;

(f) to cancel this notice of contract opportunity at any time prior to the execution of a final contract, whether or not a notice of intent to contract has been issued, with or without issuing, in the City’s sole discretion, a new notice of contract opportunity for the same or similar services;

(g) to do any of the foregoing without notice to Applicants or others, except such notice as the City, in its sole discretion, elects to post on eContractPhilly.

2. Proposal Selection and Contract Negotiation

The City reserves and may, in its sole discretion, exercise any one or more of the following rights and options with respect to proposal selection:

(a) to reject any proposal if the City, in its sole discretion, determines the proposal is incomplete, deviates from or is not responsive to the requirements of this notice of contract opportunity, does not comply with applicable law (including, without limitation, Chapter 17-1400 of the Philadelphia Code), is conditioned in any way, or contains ambiguities, alterations or items of work not called for by this notice of contract


opportunity, or if the City determines it is otherwise in the best interest of the City to reject the proposal; (b) to reject any proposal if, in the City’s sole judgment, the Applicant has been delinquent or unfaithful in the performance of any contract with the City or with others; is delinquent, and has not made arrangements satisfactory to the City, with respect to the payment of City taxes or taxes collected by the City on behalf of the School District of Philadelphia, or other indebtedness owed to the City; is not in compliance with City regulatory codes applicable to Applicant; is financially or technically incapable; or is otherwise not a responsible Applicant; (c) to waive any defect or deficiency in any proposal, including, without limitation, those identified in subsections(a) and (b) preceding, if, in the City’s sole judgment, the defect or deficiency is not material to the proposal; (d) to require, permit or reject, in the City’s sole discretion, amendments (including, without limitation, information omitted), modifications, clarifying information, and/or corrections to their proposals by some or all of the Applicants at any time following proposal submission and before the execution of a final contract; (e) to issue a notice of intent to contract and/or execute a contract for any or all of the items in any proposal, in whole or in part, as the City, in its sole discretion, determines to be in the City’s best interest; (f) to enter into negotiations with any one or more Applicants regarding price, scope of services, or any other term of their proposals, and such other contractual terms as the City may require, at any time prior to execution of a final contract, whether or not a notice of intent to contract has been issued to any Applicant and without reissuing this notice of contract opportunity; (g) to enter into simultaneous, competitive negotiations with multiple Applicants or to negotiate with individual Applicants, either together or in sequence, and to permit or require, as a result of negotiations, the expansion or reduction of the scope of services or changes in any other terms of the submitted proposals, without informing other Applicants of the changes or affording them the opportunity to revise their proposals in light thereof, unless the City, in its sole discretion, determines that doing so is in the City’s best interest; (h) to discontinue negotiations with any Applicant at any time prior to the execution of a final contract, whether or not a notice of intent to contract has been issued to the Applicant, and to enter into negotiations with any other Applicant, if the City, in its sole discretion, determines it is in the best interest of the City to do so; (i) to rescind, at any time prior to the execution of a final contract, any notice of intent to contract issued to an Applicant, and to issue or not issue a notice of intent to contract to the same or a different Applicant and enter into negotiations with that Applicant, if the City, in its sole discretion, determines it is in the best interest of the City to do so; (j) to elect not to enter into any contract with any Applicant, whether or not a notice of Intent to Contract has been issued and with or without the reissuing this notice of contract opportunity, if the City determines that it is in the City's best interest to do so; (k) to require any one or more Applicants to make one or more presentations to the City at the City’s offices or other location as determined by the City, at the Applicant’s


sole cost and expense, addressing the Applicant’s proposal and its ability to achieve the objectives of this notice of contract opportunity; (l) to conduct on-site investigations of the facilities of any one or more Applicants (or the facilities where the Applicant performs its services); (m) to inspect and otherwise investigate projects performed by the Applicant, whether or not referenced in the proposal, with or without consent of or notice to the Applicant; (n) to conduct such investigations with respect to the financial, technical, and other qualifications of each Applicant as the City, in its sole discretion, deems necessary or appropriate; and, (o) to do any of the foregoing without notice to Applicants or others, except such notice as the City, in its sole discretion, elects to post on eContractPhilly.

3. Miscellaneous (a) Interpretation; Order of Precedence. In the event of conflict, inconsistency or

variance between the terms of this Reservation of Rights and any term, condition or provision contained in any notice of contract opportunity, the terms of this Reservation of Rights shall govern.

(b) Headings. The headings used in this Reservation of Rights do not in any way define, limit, describe or amplify the provisions of this Reservation of Rights or the scope or intent of the provisions, and are not part of this Reservation of Rights.

(f) Confidentiality and Public Disclosure The successful Applicant shall treat all information obtained from the City which is not generally available to the public as confidential and/or proprietary to the City. The successful Applicant shall exercise all reasonable precautions to prevent any information derived from such sources from being disclosed to any other person. The successful Applicant agrees to indemnify and hold harmless the City, its officials and employees, from and against all liability, demands, claims, suits, losses, damages, causes of action, fines and judgments (including attorney's fees) resulting from any use or disclosure of such confidential and/or proprietary information by the successful Applicant or any person acquiring such information, directly or indirectly, from the successful Applicant. By submission of a proposal, Applicants acknowledge and agree that the City, as a municipal corporation, is subject to state and local public disclosure laws and, as such, is legally obligated to disclose to the public documents, including proposals, to the extent required thereunder. Without limiting the foregoing sentence, the City's legal obligations shall not be limited or expanded in any way by an Applicant's assertion of confidentiality and/or proprietary data.


APPENDIX A

INVESTMENT MANAGEMENT AGREEMENT

THIS AGREEMENT, made this day of , 201 , but effective

, 201 , by and between the CITY OF PHILADELPHIA (“City”), acting through its SINKING

FUND COMMISSION (“Commission”), located at 640 Municipal Services Building, 1401

John F. Kennedy Boulevard, Philadelphia, PA 19102, on behalf of the PHILADELPHIA GAS

WORKS PENSION PLAN (“Plan”), and [name of firm], a [jurisdiction] [form of business

organization], located at [registered address] (“Manager”), a wholly-owned subsidiary of [parent

organization, if applicable],

WITNESSETH

1. ENGAGEMENT OF THE MANAGER

(a) Effective as of 12:01 a.m. on the first day of _____________, 201 ("Effective

Date"), and until this Agreement terminates as provided herein, the Commission hereby engages

the Manager as an Investment Manager for the _____________________________ portfolio and

delegates to the Manager the power to manage in a separate account (“Account”) a portion of the

assets (“Fund”) held in trust for the Plan, including the investment and reinvestment of such

assets and any income therefrom and the power to acquire securities for and dispose of securities

of the Account, all in accordance with the terms and conditions of this Agreement, including the

Statement of Investment Guidelines ("Guidelines”), which Guidelines are incorporated by

reference in this Agreement and made a part hereof at Schedule A. The Plan may, upon written

notice to the Manager, add or withdraw assets from the Account.

The benchmark /index for each of the various portfolios is shown below:

Benchmark/Index Portfolio Objective

Barclays Aggregate Core Fixed Income Barclays Aggregate Core Plus Fixed Income Barclays Intermediate U. S. Government/Credit Intermediate Fixed Income Barclays Intermediate Aggregate Intermediate Plus Fixed Income


Russell 1000 Growth Domestic Large Cap Growth Equity Russell 1000 Domestic Large Cap Equity Index S&P 500 Domestic Large Cap Core Equity Russell 1000 Value Domestic Large Cap Value Equity Russell 2000 Growth Domestic Small Cap Growth Equity Russell 2000 DomesticSmall Cap Core Equity Russell 2000 Value Domestic Small Cap Value Equity MSCI EAFE International Equity MSCI Emerging Markets Emerging Markets Equity

The following paragraph does not apply to index managers:

Consistent with the current Guidelines, the Manager's benchmark shall be the Index and the

Manager's objectives shall be to exceed the Index on a gross of fee basis by the following

spreads:

Core and Intermediate Fixed Income 25 basis points Core Plus and Intermediate Plus 50 Large Cap Equity 80 Small Cap 90 International 100

The manager should, rank in the top 50% of the Gallagher Fiduciary Advisors GRID® (Graphical

Ranking of Investment Descriptors) Universe for the applicable Managers (as described in the

Guidelines) and exceed the down market index corresponding to the relevant Index by at least

one (1) basis point.

The Commission may from time to time amend the Guidelines, and the amended Guidelines

shall be binding upon the Manager upon Written Notice to the Manager. In the event of any

conflict between the provisions of this Paragraph 1(a) of this Agreement and the Guidelines as

they may from time be amended, this Agreement shall take precedence. The Commission shall

promptly provide to the Manager a copy of any and all amendments to the Guidelines, or any

amended and restated Guidelines, the receipt and review of which the Manager shall

acknowledge in writing to the Commission.

(b) The Manager, for and in consideration of the compensation expressed in this

Agreement at Schedule B, hereby agrees to be engaged as an Investment Manager as described


in Paragraph 1(a) above and acknowledges that the assets of the Account are those of the Fund,

which is governed by applicable federal laws and the laws of the City and of the Commonwealth

of Pennsylvania. The Manager understands and agrees that the Commission is responsible for

making and directing the implementation of policy relating to the Fund, such as adoption of the

Guidelines and the asset allocation target ranges included therein, and the engagement and

termination of Investment Managers in connection with this Agreement.

(c) The Commission represents that the appointment of the Manager is authorized

and proper, that the terms of this Agreement do not violate or abridge any obligation or duty of

the Commission, and that this Agreement has been authorized by appropriate Commission action

and when delivered to and executed by the Commission will be binding upon the Commission in

accordance with its terms.

2. TERM

Subject to the termination provisions contained herein, the term of this Agreement shall

be for one (1) year from the Effective Date of the Agreement, that is, from _______________,

201 to _________________, 201 . This Agreement shall be renewable for up to three (3)

additional one- (1-) year terms at the sole discretion of the City unless otherwise terminated as

provided herein. Subject to the termination provisions contained herein, in the event the

Commission fails to authorize payments for any renewal term, this Agreement and the liability of

the Commission hereunder shall terminate.

3. AUTHORITY OF THE MANAGER

(a) The securities custodian of the Account is Wells Fargo Bank, N.A. Institutional

Retirement and Trust (“Custodian”). The Manager is authorized in accordance with this

Paragraph in the name of the Fund: to purchase for the Account any security permitted by the

Guidelines from, or sell any security in the Account to, any person; to instruct the Custodian to

deliver securities sold, exchanged or otherwise disposed of from the Account, and to pay cash

from the proceeds of the sale of units of the Short-Term Investment Fund (STIF, or “Sweep

Vehicle”) in the Account for securities delivered to the Custodian for the Account upon

acquisition, and to purchase units of the Sweep Vehicle for the Account for securities delivered

from the Custodian upon disposition. The Manager shall not place any assets of the Account in a


money market fund or other investment vehicle managed by the Manager, or in which the

Manager has any financial interest. The authorization herein does not include, and shall not be

construed to include, any authorization for the Manager to deliver or pay securities or cash to

itself. The Commission shall advise the Manager immediately of any change regarding the

Custodian.

(b) The Manager is prohibited from borrowing money from the Fund, the Account or

the Custodian. Accordingly, the Manager shall not permit the Account to be overdrawn

according to the records of the Custodian. In the event of any overdraft of the Account, the

following remedies shall be available to the Plan, the exercise of which is in the Plan’s sole

discretion:

If the overdraft was the result of a Manager-initiated transaction (e.g., outgoing

wire transfer instructions after the Sweep Vehicle sales deadline), the Custodian will: (1)

Calculate the Sweep Vehicle earnings amount resulting from the overdraft (“Unjust

Earnings”) using the Sweep Vehicle daily earnings rate, the amount of the overdraft and

the number of days that the overdraft was outstanding. (2) If the Sweep Vehicle balance

in the Account covered only a portion of the overdraft amount, calculate an Overdraft

Fee. (3) If no Sweep Vehicle balance existed in the Account at the time of the overdraft,

calculate an Additional Overdraft Fee for each occurrence of an overdraft. Each

Additional Overdraft Fee is the product of the overdraft balance multiplied by that day’s

Federal Reserve funds real rate plus 100 basis points.

If upon written notice from the Plan to the Manager, or if the Manager has actual

notice, of the overdraft and resultant Unjust Earnings, and, if any, Overdraft Fees and

Additional Overdraft Fees, the Manager shall, within one (1) business day following the

notice, correct the overdraft if not previously corrected, and pay any Unjust Earnings,

Overdraft Fees and Additional Overdraft Fees either to the Fund where the Custodian

debited the Account for Unjust Earnings or for Fees, or to the Custodian for its own

account where the Custodian did not debit the Account and bore the loss.

The Manager shall pay Unjust Earnings, Overdraft Fees and Additional Overdraft

Fees from its own assets and not from the Account.

Regular overdrafts may subject the Manager to additional penalties and/or

sanctions by the Commission.


(c) The Manager will not be expected or required to take any action other than the

rendering of investment-related advice with respect to lawsuits involving securities presently or

formerly held in the Account, or the issuers thereof, including actions involving bankruptcy. In

the case of class action suits involving securities held in the Account, the Manager may provide

information about the Account to third parties for purposes of participating in any settlements,

however the Manager shall not file on behalf of the Plan in any securities litigation or settlement

of securities litigation.

(d) The Commission authorizes the Manager as its agent and attorney-in-fact for the

Account for the limited purpose of entering into and executing account documentation,

agreements, contracts and other documents as requested by brokers, dealers, counterparties and

other persons in connection with the Manager’s management of the Account.

(e) Should a fiduciary of the Fund, a member of the Commission, or an employee of

the City approach the Manager to obtain any special personal favor or benefit or a favor or

benefit for some other individual or entity and not to the Fund, whether or not performance is

offered in return, the Manager shall promptly provide written notice to the Fund’s Chief

Investment Officer and to the Commission's Executive Director, setting forth all relevant details

of the incident.

4. FIDUCIARY RESPONSIBILITY

(a) The Manager acknowledges and agrees that it is a fiduciary with respect to the

Fund for purposes of this Agreement. The Manager shall carry out its duties under this

Agreement in accordance with all applicable law and regulation. In its performance hereunder,

the Manager shall exercise its duties with the degree of judgment, skill and care under the

circumstances then prevailing which persons of prudence, discretion and intelligence who are

familiar with such matters would use in the conduct of an enterprise of a like character and with

the like aims as that of the Plan.

(b) The Manager shall discharge its duties to the Plan under this Agreement solely in

the interest of the participants and beneficiaries of the Plan. The Manager must make full and

fair disclosure to the Plan of conflicts of interest, including how the Manager will manage each

conflict, before the Manager may engage in conduct that constitutes a conflict.


(c) As a fiduciary to the Plan, the Manager shall have the duty to seek best execution

of securities transactions which it initiates on the Fund’s behalf. In fulfilling this duty, the

Manager shall have authority to select broker-dealers to execute Account transactions initiated

by the Manager, and to select the markets in which transactions will be executed. The Manager

may allocate the execution of transactions executed by it, in accordance with this Agreement, to

such broker-dealers for execution in such markets, at such prices, and at such commission rates

or dealer spreads as in the good faith judgment of the Manager will be in the best interest of the

Account, taking into consideration not only the rates of brokerage commissions and fees, and

rates of commissions and fees embedded in dealer spreads, but also other relevant factors, such

as, without limitation, broker-dealer execution capabilities, financial responsibility, liquidity,

responsiveness to the Manager and value of research services (e.g., advice, analyses and reports);

and implicit transaction costs, such as market impact and opportunity cost.

The Commission may request that the Manager direct, subject to best execution, a

proportion, to be agreed upon by the Commission and the Manager, of total transaction dollar

amounts incurring broker-dealer commissions to broker-dealers either under contract to the

Commission for provision of commission rebates or which provide such rebates on a voluntary

basis (collectively, “Client-Directed Brokerage”). To the extent that the Commission requests

that the Manager direct trades to particular broker-dealers, the Manager makes no guarantee or

representation that the Manager will direct any trades or commissions, including a defined

percentage or dollar amount of trades or commissions, to any particular broker-dealers.

Alternatively, the Manager may elect to trade through broker-dealers where such trades may

generate commission rebates (“Advisor-Directed Brokerage”).

Whether as a result of Client-Directed Brokerage or Advisor-Directed Brokerage, the

following shall apply: Where the rebate is in cash (“Hard Dollar Rebates”), the broker-dealers

selected by the Manager must periodically remit aggregated rebates to the Custodian for deposit

in the Fund’s Commission Recapture Account. Where the rebate is a credit (“Soft Dollar

Rebates”), the Manager may use the credit to purchase “research services” or “brokerage

services” as defined in the safe harbor provision regarding rebates and fiduciary duty, Section

28(e), of the Securities Exchange Act of 1934 as amended, 15 U.S.C. §§ 78a et seq. (“Exchange

Act”), at § 78bb(e), and interpreted by SEC Release No. 34-54165, July 18, 2006, both


incorporated herein by reference, and any guidance which augments or succeeds that provided by

this Release.

The Manager must disclose to the Plan on at least a quarterly basis the receipt of any

Hard Dollar or Soft Dollar Rebates from broker-dealers and the disposition or application of such

Rebates, whether or not the Manager believes a Rebate falls within the Section 28(e) safe harbor

provision.

5. REPRESENTATIONS AND WARRANTIES

(a) The Manager represents and warrants:

(1) That it is registered as an Investment Adviser with the U. S. Securities and

Exchange Commission (S.E.C.) under the Investment Advisers Act of 1940 as amended,

15 U.S.C. §§ 80b-1 et seq. (“Advisers Act”), which is incorporated herein by reference,

and that it is and will be in compliance with the requirements of maintaining such

registration.

(2) That it is notice-filed with the Central Registration Depository (CRD®) of

the Financial Industry Regulatory Authority (FINRA) as a Federally Covered Investment

Adviser doing business in Pennsylvania, either with the CRD® directly or with the CRD®

through the S.E.C.’s Investment Adviser Registration Depository (IARD®), and that it is

and will be in compliance with the requirements of maintaining such registration.

(3) If required by the laws of a jurisdiction other than Pennsylvania, that it is

registered as an investment advisor with the applicable regulatory authority(ies) in each

such jurisdiction, and that it is and will be in compliance with the requirements of

maintaining such registrations.

(4) That any person employed by or associated with the Manager who (a)

makes recommendations or renders advice regarding the purchase, sale or holding of

securities, (b) manages client accounts or portfolios, (c) solicits, sells or negotiates

investment advisory services, or (d) supervises employees who perform any of the

foregoing acts in the Commonwealth of Pennsylvania, is registered as an Investment

Adviser Representative in Pennsylvania with the CRD, and that it is and will be in

compliance with the requirements of maintaining such registration.


(5) If required by the laws of a jurisdiction other than Pennsylvania, that any

person employed by or associated with the Manager who (a) makes recommendations or

renders advice regarding the purchase, sale or holding of securities, (b) manages client

accounts or portfolios, (c) solicits, sells or negotiates investment advisory services, or (d)

supervises employees who perform any of the foregoing acts, is registered as an

investment advisor representative with the applicable regulatory authority(ies) in that

jurisdiction and that it is and will be in compliance with the requirements of maintaining

such registrations.

(6) That it meets the plan fiduciary fidelity bonding requirements of Section

412 of the Employee Retirement Income Security Act of 1974 as amended, 29 U.S.C. §§

1001 et seq. (“ERISA”), at § 1112, which is incorporated herein by reference, and related

regulations, or that it carries at least an equivalent fidelity bond applicable to Manager's

actions under this Agreement, unless exempt from the Section 412 bonding requirements.

(7) That it meets the requirements of an “investment manager” as defined in

Section 3(38) of ERISA, 29 U.S.C. 1002(38).

(8) That it maintains errors and omissions insurance providing a prudent

amount of coverage for negligent acts or omissions and that such coverage is applicable

to Manager's actions under this Agreement.

(9) That it will not delegate its fiduciary responsibilities in managing the

Account under this Agreement without the prior written consent of the Commission.

(10) That it has completed, obtained and performed all registrations, filings,

approvals, authorizations, consents or examinations required by a government or a

governmental authority for acts contemplated by this Agreement.

(11) That it has implemented and enforces a policy reasonably designed to

prohibit its employees, officers and individuals subject to its control from engaging in

illegal insider trading proscribed by federal and state securities laws and regulations.

(12) That the Manager and all of the persons acting on the Manager’s behalf

pursuant to this Agreement are duly licensed, certified or trained, as may be required in

accordance with applicable law and the terms of this Agreement. This representation and

warranty includes possession of a valid Business Privilege License issued by the City.


(13) Except for conflicts that generally apply to Investment Managers that have

more than one client, including, without limitation, conflicts with respect to the allocation

of time and effort to its various clients, and except as disclosed in writing and approved

by the Commission, that neither the Manager nor any of its directors, officers, members,

partners or employees, has any interest, nor shall they acquire any interest, directly or

indirectly, that would or may conflict in any material manner or degree with the

performance or rendering of the services contemplated by this Agreement.

(14) That it is a business corporation or other business entity duly organized,

validly existing and in good standing under the laws of the State of Delaware, and that it

is duly registered, licensed, qualified and in good standing as a foreign business

organization in the Commonwealth of Pennsylvania and in all jurisdictions in which it

conducts business activities.

(15) That it is duly authorized to perform the services contemplated by this

Agreement under the laws of the Commonwealth of Pennsylvania, and that it has full

legal power and authority to enter into and perform this Agreement and provide the

services contemplated herein, and that such will not result in a default under, or a breach

or violation of (1) the Manager’s Articles of Incorporation or Bylaws or other

organizational documents, if applicable; and (2) any law, regulation, court order,

injunction or decree of any court, administrative agency or governmental body, or any

license, permit or other instrument or obligation to which the Manager is now a party or

by which the Manager may be bound or affected.

(16) That this Agreement has been duly authorized, executed and delivered by

the Manager and constitutes the legal, valid and binding obligation of the Manager,

enforceable against the Manager in accordance with its terms and that the person or

persons executing the Agreement on behalf of the Manager has or have the full power

and authority to execute the Agreement on behalf of the Manager.

(17) That there is no litigation, claim, investigation, challenge or other

proceeding pending or threatened against the Manager, its properties or business, which

seeks to enjoin or prohibit the Manager or any person associated with the Manager from

entering into or performing its obligations under the Agreement; or which, if the result


were adverse to the Manager or person, would prohibit the Manager or person from

entering into or performing its obligations under the Agreement.

(18) That the method the Manager will use to calculate and present its

performance is in compliance with CFA Institute Global Investment Performance

Standards (GIPS) and any successor provisions.

(19) That it has received and reviewed a copy of the Guidelines, as they may be

amended from time to time, and agrees to perform the services contemplated by this

Agreement as an Investment Manger for Core Plus Fixed Income in accordance with the

Guidelines and any amendments thereto, subject to Paragraph 1(a).

(20) That the Manager used no Solicitor, as that term is defined by Rule 206(4)-3

under the Advisers Act, 17 C.F.R. § 275.206(4)-3, in securing and continuing to secure

the business engagement contemplated by this Agreement, except in compliance with

Rule 206(4)-3 or successor provision.

(b) The Manager agrees to notify the Commission promptly of any changes in the

Manager's compliance with the representations and warranties stated herein, and agrees to

immediately restore the representations and warranties as required by the Commission, in the

event of a lapse. In the absence of a notice to the Commission to the contrary, the Commission

shall rely on the ongoing effectiveness of each representation and warranty contained herein,

which representations and warranties are considered by the Commission as material terms of this

Agreement.

(c) The Commission represents and warrants that:

(1) It has all necessary power and authority to execute, deliver and perform

this Agreement.

(2) This Agreement is a valid and binding contract enforceable against it.

(3) The Commission and/or any person designated by the Commission will

have due authorization to act in all respects on the Commission’s behalf in connection

with this Agreement.

(4) It has received a copy of Part II of the Manager’s Form ADV not less than

forty-eight (48) hours prior to entering into this Agreement and represents that it

understands the matters set forth in Part II of such Form ADV.


(5) It has complied, in all material respects, with all registrations required by,

and will comply in all material respects with, all applicable rules and regulations.

(d) The Commission agrees to provide to the Manager the information and

documents listed on the attached Schedule C, Information and Documentation to be Provided by

the Commission. Throughout the term of this Agreement, the Commission shall provide prior

notice, if possible, to the Manager of any changes to such information or documentation.

6. INVESTMENT DIRECTION

(a) The Manager shall select investments for the Account in accordance with all

directions, instructions and restrictions which shall be provided by the Commission from time to

time including, without limitation, the Guidelines. The Commission retains the right to modify

all directions, instructions and restrictions in any manner and at any time by giving Written

Notice to the Manager. The Manager may rely conclusively upon and shall incur no liability

hereunder in acting upon any notice, order, request, instruction or other communication

reasonably believed by it to be genuine or to be signed by a duly authorized person whose names

and signatures appear in Exhibit 1 attached hereto and made a part hereof.

(b) In the event the Manager selects investments for the Account that contravene the

directions, instructions and restrictions provided by the Commission including without

limitation, the Guidelines referred to in Paragraph 6(a), above, then, at the sole discretion of the

Commission, the Commission may elect to avail itself of any combination of remedies, which

shall not be exclusive or cumulative, including without limitation, reimbursement for any funds

lost as a result of such investment; formal letter of censure; and/or termination of this

Agreement.

7. COMPENSATION TO THE MANAGER

As full compensation for services rendered under this Agreement, the Manager shall be

paid by the Commission quarterly, in arrears, in accordance with Schedule B of this Agreement,

attached hereto and made a part hereof. Anything to the contrary notwithstanding, before any

payment shall become due and payable to the Manager, the Manager shall furnish to the

Commission’s Executive Director bills and vouchers in such number, form and content as the

Commission may reasonably require. Upon receipt and approval of such bills and vouchers, the


Manager shall be paid by check issued by the Custodian. All payments to the Manager are

contingent upon performance of the terms and conditions of this Agreement. The Commission

reserves the right to withhold or offset against any funds payable to the Manager for any invoice

for which the Commission asserts a discrepancy exists or for the Manager’s failure to

satisfactorily perform the terms of this Agreement, as determined in good faith by the

Commission. The Manager shall submit its final invoice for the Agreement not more than thirty

(30) days from completion of the services under this Agreement. The Manager shall not be

compensated on the basis of a share of capital gains or capital appreciation (or capital

depreciation) of the assets of the Fund. The immediately foregoing sentence does not apply to

the Account, so long as any performance fee arrangement conforms to Rule 205(a)(1) under the

Advisers Act, 17 C.F.R. § 275.205(a)(1), incorporated herein by reference, or successor

provision thereto.

8. REPORTS AND ACCOUNTING

(a) The Manager agrees to furnish monthly, quarterly and annual reports as

determined by the Commission and agreed to by the Manager on all investment activity and

other information as reasonably requested. The Manager shall furnish reports in a format and

with contents reasonably acceptable to the Commission.

(b) Without limiting the foregoing, the Manager agrees to keep accurate and detailed

accounts of all investments, receipts, disbursements and other transactions. The Manager agrees

to verify and reconcile all transaction activity monthly with reports generated by the Custodian

and promptly resolve any discrepancy. The Manager agrees to promptly resolve any disputes on

transactions, valuations, and accruals and notify the Commission of the resolution.

9. TRANSACTION PROCEDURES

(a) The Manager shall conduct all transactions according to detailed instructions

provided from time to time by the Custodian.

(b) At the Custodian’s request, the Manager shall establish and maintain throughout

the term of this Agreement a computer interface with the Custodian at the Manager's facility.

10. CUSTODY, DELIVERY AND RECEIPT OF SECURITIES AND OTHER ASSETS


The Commission shall be responsible for the establishment and maintenance of proper

arrangements for the custody, delivery and receipt of securities and other assets (including all

cash and/or securities due to or from the Account) of the Account and, shall be responsible for

the payment of all custodial charges and fees, except for Unjust Earnings, Overdraft Fees and

Additional Overdraft Fees which are the responsibility of the Manager under Paragraph 3(b) of

this Agreement. Upon giving proper instructions to the Custodian, the Manager shall have no

responsibility or liability with respect to custodial arrangements or the acts, omissions or other

conduct of the Custodian. All portfolio transactions will be consummated by payment to or

delivery by the Custodian or such depositories or agents as may be designated by the

Commission from time to time in writing. All instructions from the Manager to the Custodian

shall be in writing, or shall be made orally and confirmed in writing as soon thereafter as may be

practicable. The Manager shall instruct all broker-dealers executing orders on behalf of the

Account to promptly forward to the Custodian notification of each transaction. The Manager

shall report to the Commission irregularities of the Custodian. For illustrative purposes, such

irregularities that occur on a frequent basis (i.e., more than is common or commonly acceptable

practice in the industry) will include, without limitation, trades not settled properly and/or in a

timely manner; pricing discrepancies, etc.

11. SUBCONTRACTING AND ASSIGNMENT

(a) No subcontract or assignment as that term is defined in the Advisers Act, may be

entered into by the Manager with respect to this Agreement without the prior written consent of

the Commission and any such attempted subcontract or assignment without such consent shall be

of no force or effect and shall be grounds for immediate termination of this Agreement. Any

services performed subsequent to an attempted assignment that have not been consented to in

advance by the Commission shall not be compensable and any costs incurred in connection with

such services shall be the sole responsibility and liability of the Manager.

(b) The Manager shall submit to the Commission copies of all proposed subcontracts

to be entered into by the Manager, along with the Manager’s written request for the

Commission’s consent. All such subcontracts must specify that:

(1) work performed by the subcontractor shall be in exact accordance with the terms of the Agreement;


(2) nothing contained in such subcontract shall be construed to impair the rights of the Commission under the Agreement;

(3) the Commission’s consent to or approval of any subcontract shall not

create or purport to create any obligation of the Commission to any subcontractor;

(4) nothing contained in such subcontract, or under the Agreement, shall create or purport to create any obligation of the Commission to any subcontractor;

(5) the Commission shall be expressly designated a third party beneficiary of

the subcontract;

(6) upon request by the Commission, at the Commission’s sole option, and upon receipt of written notice from the Commission stating that the Agreement between the Commission and the Manager has been terminated, the subcontractor agrees that it will continue to perform its obligations under the subcontract for the benefit of the Commission in accordance with the terms and conditions of this Agreement, provided the Commission pays the subcontractor for the services rendered by the subcontractor from and after the date of the termination of the Agreement between the Commission and the Manager at the same rate or in the same amount as set forth in the subcontract for services after such date of termination; and

(7) the subcontractor shall be bound by the same requirements as the Manager

including, without limitation, confidentiality, maintenance and preservation of records, and audit by government representatives, under the Agreement.

(c) No permitted subcontract shall relieve the Manager of any obligation under the

Agreement. The Manager shall be as fully responsible for the acts and omissions of its

subcontractors or persons either directly or indirectly employed by them, as it is for the acts and

omissions of the Manager or persons directly or indirectly employed by the Manager.

(d) The subcontractor shall not be indebted to the City. To satisfy this requirement,

the Manager shall include Paragraph 26 hereof, with appropriate adjustments for the identity of

the parties, in all subcontracts that are entered into for work to be performed pursuant to this

Agreement.

(e) Submission of a proposed subcontract to the City for approval shall constitute a

representation of the Manager that, to the best of its knowledge, information and belief, the

subcontractor holds a valid current business privilege license from the City and the subcontractor

is not indebted to the City.


(f) The prohibition against assignment shall prohibit assignment by a receiver or

trustee in any federal or state bankruptcy, insolvency or other proceedings, or by operation of

law.

(g) The Manager acknowledges that the services are the personal services of the

Manager and the Commission shall have no obligation to accept performance by a third party

without the Commission’s prior express written consent.

12. AUTHORIZED PERSONNEL AND STAFF

(a) The current list and specimen signatures of the persons who are authorized to act

on the Manager's behalf pursuant to this Agreement are attached hereto and incorporated by this

reference as Exhibit 2.

(b) The members and staff of the Commission who are authorized to conduct

business on behalf of the Fund and their specimen signatures are attached hereto and

incorporated by this reference as Exhibit 1.

(c) Both parties shall be entitled to rely upon such lists and specimen signatures until

written notice of revocation or modification is received and accepted by the other party. The

Commission shall have the right to refuse portfolio management services of the Manager not

supervised by those persons referenced in Exhibit 2.

(d) The staff representing the Manager and assigned to provide client services to the

Commission and the Fund are referenced in Exhibit 2.

13. SERVICE TO OTHER CLIENTS

It is understood that the Manager performs investment advisory services for various

clients. The Manager may give advice to and act for any of its other clients in a manner which

may differ from its advice or actions with respect to the Account so long as the Manager, to the

extent possible, allocates investment opportunities over a period of time on a fair and equitable

basis to all clients. It is understood that the Manager shall not have any obligation to purchase or

sell, or to recommend for purchase or sale for the Account, any security which its principals,

affiliates or employees may purchase or sell for its or their own accounts or for the account of

any other client, if in the opinion of the Manager, such transaction or investment appears

unsuitable, impractical or undesirable for the Account.


14. VOTING OF PROXIES

The Manager is authorized to take action with respect to voting of proxies solicited by or

with respect to the issuers of securities in which assets of the Account may be invested, and shall

periodically provide to the Commission a report of such voting. All proxies will be voted in

accordance with the Manager’s voting policies, except that the Commission reserves all rights

with respect to proxy voting, including the right to direct the Manager to vote any proxy in

accordance with any written instructions issued by the Commission.

15. COMPLIANCE WITH SOLICITOR REFERRAL FEE ARRANGEMENTS

The Manager covenants that it used and uses no Solicitor, as that term is defined by Rule

206(4)-3 under the Advisers Act, excepting bona fide employees of the Manager, in securing and

continuing to secure the investment management engagement contemplated by this Agreement,

provided that:

Where the Manager used or uses a Solicitor (“Third Party Marketer” or “TPM”) which is

not a bona fide employee of the Manager, in securing and continuing to secure the investment

management engagement contemplated by this Agreement, the Manager covenants that:

(a) It has entered into a written solicitor referral arrangement between the

Manager and the TPM which includes, without limitation, (1) a description of the TPM’s

scope of services and the compensation therefor to be paid by the Manager to the TPM,

(2) a covenant by the TPM to perform such activities consistent with the instructions of

the Manager and in compliance with the Advisers Act and associated rules, and (3) a

covenant by the TPM to provide the Plan with a copy of the Manager’s Form ADV Part

II and Schedule F and with a separate written solicitor disclosure document (“Solicitor

Disclosure”).

(b) The Solicitor Disclosure to which reference is made in Paragraph 15(a),

above, shall contain, without limitation, (1) the name of the TPM, (2) the name of the

Manager, (3) the nature of the relationship between the TPM and the Manager, (4) a

statement that the TPM will be compensated by the Manager for solicitation services in

connection with the referral, (5) the terms of such compensation arrangement including a


description of the compensation paid or to be paid to the TPM, and (6) the additional

amount, if any, that will be charged to the investment advisory fee and the differential

attributable to such a solicitor arrangement.

The Commission shall have the right, in the event of breach of this provision by the

Manager, to terminate this Agreement without liability, pay only for the value of the work

actually performed, or in its discretion, to deduct from the Agreement or consideration, or to

otherwise recover, the full amount of such commission, percentage or brokerage fee.

16. AMENDMENT

Unless otherwise specifically stated in this Agreement, no amendment to this Agreement

shall be valid unless made in writing and signed by all parties.

17. SUBSTITUTIONS

The Manager shall not cause the investment professionals assigned to the Account as

identified herein to be substituted or removed without the prior written approval of the

Commission. In the event of exigent circumstances, the Manager may substitute or remove one

or more of the investment professionals assigned to the Account provided the Manager gives the

Commission any type of notice promptly of any change in the investment professionals assigned

to the Account. The Manager shall be responsible for ensuring that such type of notice is

actually received by the Commission and if the notice was not a Written Notice, shall promptly

follow such notice with Written Notice as set forth in Paragraph 23 hereof. Within thirty (30)

days of receipt of the Written Notice, the Commission shall advise the Manager whether it

approves of the investment professionals assigned to the Account. In the event of the

Commission’s disapproval, the Manager shall use commercially reasonable efforts to promptly

substitute investment professionals that are satisfactory to the Commission.

18. EVALUATION OF MANAGER

A quarterly evaluation of the Manager's performance will be completed by the Fund’s

Chief Investment Officer and/or investment consultant who will present the evaluations to the

Commission. The Manager may be evaluated more frequently in the sole discretion of the


Commission. The Manager shall cooperate fully with the Commission in connection with any

evaluation process.

19. ADDITIONAL DOCUMENTS

The Manager and Commission agree to execute such additional documents as may be

reasonable and necessary to carry out the provisions of this Agreement.

20. INSURANCE

The Manager shall, at its sole cost and expense, procure and maintain in full force and

effect, covering the performance of the services required under this Agreement, the types and

minimum limits of insurance specified below. All insurance shall be procured from reputable

insurers licensed to do business in the Commonwealth of Pennsylvania.. Each insurer must have

a financial strength rating or ratings as follows: (1) a minimum of A- from A. M. Best, or,

alternatively, (2) any two of minimums of AA- from Fitch, Aa3 from Moody’s, AA- from

Standard & Poor’s or A- from Weiss. The Manager shall maintain coverages complying with the

foregoing licensure and ratings requirements during the entire term of this Agreement.

All insurance required herein, except the Professional Liability Insurance, shall be written

on an "occurrence" basis and not a "claims-made" basis. In no event shall work be performed

until the required evidence of insurance has been furnished. If the Manager fails to obtain or

maintain the required insurance, the Commission shall have the right to treat such failure as a

breach of contract and to exercise all appropriate rights and remedies. The Manager shall

provide written notice to the Commission in the event coverage is materially changed, canceled

or non-renewed. The City, the Commission, their officers, employees and agents are to be

named as additional insureds on the General Liability Insurance policy. Also, coverage afforded

the City, the Commission, their officers, employees and agents as additional insureds will be

primary to any coverage available to them.

(a) WORKERS COMPENSATION AND EMPLOYERS LIABILITY

(1) Workers Compensation: Statutory limits.


(2) Employers Liability: $500,000 Each Accident - Bodily Injury by Accident; $500,000 Each Employee - Bodily Injury by Disease; $500,000 Policy Limit.

(b) GENERAL LIABILITY INSURANCE

(1) Limit of liability: $1,000,000 per occurrence combined single limit for

bodily injury (including death) and property damage liability; $1,000,000 personal and advertising injury; $2,000,000 general aggregate and $1,000,000 aggregate for products and completed operations. Manager may elect to satisfy the insurance requirements set forth in this Subparagraph 20(b)(1) by a self-insurance retention.

(2) Coverage: Premises operations; blanket contractual liability; personal

injury liability; products and completed operations; independent contractors; employees as insureds; severability of interest; and broad form property damage (including complete operations).

(c) AUTOMOBILE LIABILITY

(1) It is understood and agreed that based on the following representation and

warranty of the Manager, the City has waived its standard insurance requirements for automobile liability.

(2) The manager represents and warrants that no automobile or other motor

vehicle will be utilized by the Manager in the performance of the services required under this Agreement.

(d) PROFESSIONAL LIABILITY INSURANCE

(1) Limit of Liability: $10,000,000 limit.

(2) Coverage: Errors and omissions including liability assumed under

contract.

(3) Coverage for occurrences happening during the performance of the service required under this Agreement shall be maintained full force and effect under the policy or "tail" coverage for a period of at least two (2) years after completion of the services.

Certificates of insurance evidencing the required coverage shall be submitted to the

Commission and the City's Risk Manager (1515 Arch Street, 14th Floor, Philadelphia,

Pennsylvania 19102) at least ten (10) days before work is begun and at least ten (10) days after

each renewal date. The ten- (10-) day requirement for advance documentation of coverage may

be waived in situations where such waiver will benefit the Commission and the Plan, but under


no circumstances shall the Commission allow the Manager to begin work (or continue work, in

the case of renewal) without providing the required evidence of insurance. The insurance

requirements set forth herein are not intended and shall not be construed to modify, limit or

reduce the indemnifications made in this Agreement by the Manager to the Commission or to

limit the Manager's liability under this Agreement to the limits of the policies of insurance

required to be maintained by the Manager hereunder.

21. INDEMNIFICATION

The Manager agrees to indemnify, defend and save harmless the City and the

Commission, including their respective employees, officers and agents from and against any and

all losses, claims, suits, actions, damages, liability (including, but not limited to, reasonable

litigation and settlement costs and counsel fees) and expenses, including without limitation,

those in connection with loss of life, bodily and personal injury or damage to personal property,

to the extent occasioned in connection with this Agreement, by the negligent act or omission or

willful malfeasance or bad faith of the Manager or the negligent act or omission or willful

malfeasance or bad faith of the Manager's agents, subcontractors, officers, servants or

employees. This obligation to indemnify, defend and hold harmless the City and the

Commission, including their respective employees, officers and agents, shall survive the

termination of this Agreement.

22. TERMINATION

This Agreement may be terminated immediately by the Commission upon Written

Notice, with or without cause, and with thirty (30) days Written Notice by the Manager, with or

without cause. In the event this Agreement is terminated, the Commission shall pay pro rata the

Manager’s fees due through the date of termination. Upon notice of termination by the

Commission, unless otherwise instructed by the Chief Investment Officer of the Plan, the

Manager shall immediately cease the initiation of purchase and sale activity, and provide the

Commission with Written Notice of all trades in process. The Manager’s obligations as to

reporting to the Commission and reconciliation of accounts with the Custodian, both under

Paragraph 8 hereof, shall survive the effective date of termination until the Manager produces the

next regular report and the Manager’s and Custodian’s accounts are reconciled.


23. NOTICES

Any notices, direction, instruction, acknowledgement, or other communication required

or contemplated by this Agreement shall be by Written Notice. “Written Notice” as the term is

used in this Agreement shall mean notification to the recipient, the receipt of which is evidenced

by a delivery confirmation from the delivery mechanism (e.g., e-mail, USPS, private courier) or

a return receipt from or written acknowledgement by the Manager. “Return receipt” includes

such receipts as are automatically generated by the recipient’s e-mail system.

Written Notices shall be addressed as follows:

To the Commission and the Plan:

Matthew R. Mazza Executive Director, Sinking Fund Commission 1401 John F. Kennedy Blvd. Room 640, MSB Philadelphia, PA 19102-1678 telephone 215-686-3811, fax 215-686-3815 [email protected]

With a copy to:

Christopher R. DiFusco Chief Investment Officer, Philadelphia Gas Works Pension Plan Two Penn Center Plaza, 17th Floor Philadelphia, PA 19102-1721 telephone 215-496-7463, fax 215-496-7460 [email protected]

To the Manager (as appropriate):

Either party may update contact information by providing Written Notice to the other

party pursuant to this Paragraph.

24. GOVERNING LAW


The laws of the Commonwealth of Pennsylvania, and the City of Pennsylvania, including

all applicable laws, statutes and ordinances thereof, and all applicable rules, regulations, methods

and procedures of governmental boards, bureaus, offices, commissions and other agencies, shall

control all matters relating to this Agreement and shall apply to the extent not preempted by the

laws of the United States of America.

25. NON-DISCRIMINATION REQUIREMENTS

This Agreement is entered into under the terms of the Philadelphia Home Rule Charter

and in its performance, the Manager shall not discriminate nor permit discrimination against any

person because of race, color, religion, national origin or sex. In the event of such

discrimination, the Commission may terminate this Agreement immediately.

(a) In accordance with Chapter 17-400 of The Philadelphia Code (“Chapter 17-400”),

the Manager agrees that its payment or reimbursement of membership fees or other expenses

associated with participation by its employees in an exclusionary private organization, insofar as

such participation confers an employment advantage or constitutes or results in discrimination

with regard to hiring, tenure of employment, promotions, terms, privileges or conditions of

employment on the basis of race, color, sex, sexual orientation, religion, national origin or

ancestry, constitutes a substantial breach of this Agreement entitling the Commission to all rights

and remedies provided in this Agreement or otherwise available in law or equity.

(b) The Manager agrees to include the immediately preceding Paragraph 25(a), with

appropriate adjustments for the identity of the parties, in all subcontracts which are entered into

for work to be performed pursuant to this Agreement.

(c) The Manager further agrees to cooperate with the City of Philadelphia

Commission on Human Relations (“PCHR”) in any manner which the PCHR deems reasonable

and necessary for the Commission to carry out its responsibilities under Chapter 17-400. Failure

to so cooperate shall constitute a substantial breach of this Agreement entitling the Commission

to all rights and remedies provided herein or otherwise available in law or equity.

26. CERTIFICATE OF NON-INDEBTEDNESS

(a) The Manager and any entities under common control with the Manager or

controlled by the Manager are not currently indebted to the City, and shall not at any time during


the term of this Agreement (including any renewal terms) be indebted to the City, for or on

account of any delinquent taxes (including, but not limited to, taxes collected by the City on

behalf of the School District of Philadelphia), water bills, sewer bills, liens, judgments, fees or

other debts for which no written agreement or payment plan satisfactory to the City has been

established. The Manager shall remain current during the term of this Agreement with all such

payments and shall inform the Commission's Executive Director or the Plan's Chief Investment

Officer of the Manager's receipt of any notices of delinquent payments by Written Notice within

five (5) days after receipt. In addition to any other rights or remedies available to the City at law

or in equity, the Manager acknowledges that any breach or failure to conform to this

representation and covenant may, at the option of the City, result in the withholding of payments

otherwise due to the Manager and, if such breach or failure is not resolved to the City's

satisfaction within a reasonable time frame specified by the City in writing, may result in the

offset of any such indebtedness against said payments and/or termination of this Agreement for

default (in which case the Manager shall be liable for all excess costs and other damages

resulting from the termination). In addition, it is understood that false certification or

representation is subject to prosecution under Title 18 Pa.C.S. § 4904.

(b) The Manager agrees to include the immediately preceding Paragraph 26(a), with

appropriate adjustments for the identity of the parties, in all subcontracts which are entered into

for work to be performed pursuant to this Agreement.

27. INSPECTION OF RECORDS

(a) The Manager agrees that the Commission or its designee will have the right to

review, obtain, and copy all records material to determining Manager’s performance of its

obligations under this Agreement. The Manager agrees to provide the Commission or its

designee with any such relevant information reasonably requested and shall permit the

Commission or its designee access to its premises, upon reasonable notice, during normal

business hours for the purpose of interviewing employees and inspecting and copying, at the

expense of the Commission, Manager's books, records, accounts, and other material which are

material in determining the Manager’s performance of its obligations under this Agreement,

including without limitation, information that may be relevant to a matter under investigation for


the purpose of determining compliance with regulations. The Manager further agrees to

maintain such records in compliance with applicable state and federal law and regulation..

(b) During the period for which the Manager has agreed to maintain records, as

described in Paragraph 27(a) hereof, in compliance with applicable state and federal law and

regulation, the Commission may audit the Manager’s performance under this Agreement. Audits

may be conducted by representatives of the Commission or other authorized City representatives

including, without limitation, the City Controller. If so requested, the Manager shall submit to

the Commission all vouchers or invoices presented for payment pursuant to this Agreement, all

material work papers, books, records and accounts upon which the vouchers or invoices are

based, and any and all reasonable documentation and justification in support of expenditures or

fees incurred pursuant to this Agreement. All books, invoices, vouchers, records, reports,

canceled checks and other materials shall be subject to periodic review and audit.

(c) The Manager shall make available within the City of Philadelphia at reasonable

times during the term of this Agreement and for the period required by applicable state and

federal laws all records material to the determination of Manager’s performance of its

obligations under this Agreement for the purpose of inspection, audit or reproduction by any

authorized Commission or City representative, the Pennsylvania Auditor General or any other

federal or state official having jurisdiction over a matter relevant to the Manager’s performance

of its obligations under this Agreement..

(d) The Manager shall retain all records, books of account and documentation

pertaining to this Agreement in compliance with applicable state and federal law and regulation;

however, if any litigation, claim or audit is commenced during the period for which the Manager

has agreed to maintain records in compliance with applicable state and federal law and

regulation, then the records shall be retained until all litigation, claims or audit findings have

been completely terminated or resolved, without right of further appeal, or if applicable law

requires a longer period, then the records shall be retained for such longer period.

28. MISCELLANEOUS

Where the context of this Agreement admits, words in the plural shall include the

singular and the singular shall include the plural, and pronouns of any gender shall be deemed to

include and designate the masculine, feminine or neuter gender.


29. INDEPENDENT CONTRACTOR

The Manager is an independent contractor and shall not in any way or for any purpose be

deemed or intended to be an employee or agent of the Commission, the Plan, the Fund or the

City (collectively, the “City Entities”). The Manager shall not in any way represent that the

Manager is one of the City Entities, and the Manager shall not use the name of any of the City

Entities in any way which would imply that the Manager or the Manager’s employees or

Subcontractors are acting as officials or employees of any of the City Entities.

30. LITIGATION COOPERATION

If, at any time, the Commission becomes involved in a dispute or receives notice of a

claim or is involved in litigation concerning the services provided under this Agreement, the

resolution of which requires the services of the Manager, and the Manager is not otherwise

obligated to indemnify and defend the Commission pursuant to the provisions of Paragraph 21

hereof, the Manager agrees to provide reasonable services and cooperation to the Commission in

resolving such claim and/or litigation.

31. EXCLUDED 2/24/2014

32. FEDERAL LAWS

The Manager shall comply with the applicable provisions of Title VI of the Civil Rights

Act of 1964 (42 U.S.C. Section 2000d, et seq.), Section 504 of the Federal Rehabilitation Act of

1973 (29 U.S.C. Section 794), The Age Discrimination Act of 1975, (42 U.S.C. Section 6101, et

seq.), Title IX of the Education Amendments of 1972, (20 U.S.C. Section 1681), and 45 C.F.R.

Part 92, as they may be amended from time to time, which together prohibit discrimination on

the basis of race, color, national origin, sex, handicap, age and religion.

33. AFFIRMATIVE ACTION

If required by the Commission, the Manager agrees to provide to the Commission, no

later than January 31 of each year in the Agreement, an annual report describing the increase or


decrease in numbers of minority and female employees during the preceding calendar year, or

the Agreement period if less than a calendar year, in each of the following three categories:

(a) rank and file employees (other than supervisors and managers);

(b) supervisors (first level supervisors); and

(c) managers (all managerial personnel other than first level supervisors).

34. AMERICANS WITH DISABILITIES ACT

The Manager understands and agrees that no individual with a disability shall, on the

basis of the disability, be excluded from participation in the Agreement or from activities or

services provided under the Agreement. As a condition of accepting and executing the

Agreement, the Manager shall comply with all provisions of the Americans with Disabilities

Act, 42 U.S.C. §§12101 et seq., and all regulations promulgated thereunder, as this Act and

regulations may be amended from time to time, which are applicable (a) to the Manager, (b) to

the benefits, services, activities, facilities and programs provided in connection with the

Agreement, (c) to the City, or the Commonwealth of Pennsylvania, (d) to the benefits, services,

activities, facilities and programs of the City or of the Commonwealth, and (e) to the

Commission, and, if any funds under the Agreement are provided by the federal government,

subject to the Commission notifying the Manager that such funds are provided by the federal

government, which are applicable to the federal government and its benefits, services, activities,

facilities and programs. Without limiting the generality of the preceding sentence, the Manager

shall comply with the "General Prohibitions Against Discrimination", 28 C.F.R. §35.130, and all

other regulations promulgated under Title II of the Americans with Disabilities Act, as they may

be amended from time to time, which are applicable to the benefits, services, programs and

activities provided by the Manager through agreements with outside contractors.

35. THE PHILADELPHIA CODE, SECTION 17-104

(a) In accordance with Section 17-104 of The Philadelphia Code (“Section 17-104”),

the Manager by execution of this Agreement certifies and represents that the Manager (including

any parent company, subsidiary, exclusive distributor or company affiliated with the Manager)

does not have, and will not have at any time during the term of this Agreement (including any

renewals thereof), any investments, licenses, franchises, management agreements or operations


in Northern Ireland unless the Manager has implemented the fair employment principles

embodied in the MacBride Principles.

(b) In the performance of this Agreement, the Manager agrees that it will not utilize

any Subcontractors at any tier who have (or whose parent, subsidiary, exclusive distributor or

company affiliate have) any investments, licenses, franchises, management agreements or

operations in Northern Ireland unless said supplier, subconsultant or subcontractor has

implemented the fair employment principles embodied in the MacBride Principles. The

Manager further agrees to include the provisions of this Paragraph 35(b), with appropriate

adjustments for the identity of the parties, in all subcontracts which are entered into in

connection with the performance of this Agreement.

(c) The Manager agrees to cooperate with the City’s Director of Finance in any

manner which the said Director deems reasonable and necessary to carry out the Director’s

responsibilities under Section 17-104. The Manager expressly understands and agrees that any

false certification or representation in connection with this Paragraph 35 and/or any failure to

comply with applicable provisions of Section 17-104 shall constitute a substantial breach of this

Agreement entitling the City to all rights and remedies provided in this Agreement or otherwise

available in law (including, but not limited to, Section 17-104) or equity. In addition, it is

understood that false certification or representation is subject to prosecution under Title 18

Pa.C.S. Section 4904.

36. WAIVER

Except to the extent that a party may have otherwise agreed in writing, no waiver by that

party of any provision of the Agreement or breach by the other party of any of its obligations or

representations under the Agreement shall be deemed to be a waiver of any other provision or

subsequent or prior breach of the same or any other obligations or representation by the other

party, nor shall any forbearance by the first party to seek a remedy for any noncompliance or

breach by the other party be deemed to be a waiver by the first party of its rights and remedies

with respect to such noncompliance or breach.

37. INTEGRATION


The Guidelines are expressly incorporated into this Agreement by this reference. This

Agreement, together with the Guidelines, contain all the terms and conditions agreed upon by the

parties, and no other agreement, oral or otherwise, regarding the subject matter of this

Agreement shall be deemed to exist or to bind any party hereto or to vary any of the terms

contained in this Agreement.

38. NO JOINT VENTURE

The parties do not intend to create, and nothing contained in this Agreement shall be

construed as creating, a joint venture or partnership between the Commission and the Manager.

39. HEADINGS

The headings in the Agreement are for convenience only and are not a part of the

Agreement. The headings do not in any way define, limit, describe or amplify the provisions of

the Agreement or the scope or intent of the provisions.

40. CITATIONS

All statutory or other citations of law referenced in the Agreement shall refer to the

statute referenced, as it may be amended or superseded from time to time.

41. DAYS

Any references to a number of days in the Agreement shall mean calendar days, unless

business days are specified.

42. FORUM SELECTION; CONSENT TO JURISDICTION

The parties agree that any lawsuit, claim or legal proceeding involving, directly or

indirectly, any matter arising out of or related to this Agreement or the relationship created or

evidenced thereby shall only be brought in either the Court of Common Pleas of Philadelphia

County or the United States District Court for the Eastern District of Pennsylvania. The parties

further agree not to raise any objection to any lawsuit, claim or legal proceeding being brought in

one of these forums, and expressly consent to the jurisdiction and venue of these forums. Each

party agrees that service of process in any such proceeding may be duly effected upon it by


mailing a copy thereof, by certified mail, postage prepaid to the address specified in Paragraph

23, Notices.

43. WAIVER OF JURY TRIAL

The Manager hereby waives trial by jury in any legal proceeding involving, directly or

indirectly, any matter, whether sounding in tort, contract or otherwise, in any way arising out of

or related to this Agreement or the relationship created or evidenced hereby. This provision is a

material inducement for the Commission to enter into this Agreement.

44. PERFORMANCE

The Manager shall enter upon the performance of its obligations under this Agreement

with all due diligence and dispatch, shall assiduously press to their complete performance and

shall exercise the skill and competence in their performance as described in Paragraph 4 hereof..

45. SEVERABILITY

In the event any provision of this Agreement shall be considered void, illegal or invalid

for any reason, said provision shall be of no force and effect only to the extent that it is void or

declared illegal or invalid. All of the provisions of this Agreement not specifically found to be

void, illegal or invalid shall remain in full force and effect.

46. NOTICE OF CHANGE

The Manager shall promptly notify the Commission of material changes in the Manager’s

ownership, changes in the key personnel managing the Account or material changes in the

Manager’s philosophy, strategy, style and like matters with respect to the Account.

47. AUTHORITY OF SIGNATORIES

Each party to this Agreement (“Executing Parties”) represents and warrants to each of the

other Executing Parties to this Agreement that the person executing and delivering this

Agreement on behalf of the Executing Party has been authorized by the Executing Party to

execute and deliver this Agreement on its behalf, which authorization has not been revoked or

modified and is in full force and effect as of the date hereof.


48. CONFIDENTIALITY

(a) The Manager, in the course of its duties, will handle investment, financial

accounting and statistical information pertaining to the Commission, the Plan and the Fund. All

such information is confidential to the extent permitted by law, and, unless permitted by the

Commission in writing, the Manager shall not disclose such information, directly or indirectly, or

use it in any way, either during the term of the Agreement or any time thereafter, except as

required to perform its duties under the Agreement or required by court order or law. Any

disclosure of information contrary to this provision shall be considered a material breach of the

Agreement and entitle the Commission to seek all remedies available at law and in equity.

(b) Subject to applicable law, all reports, documents, plans, arrangements, videos,

records, pamphlets, ads, data, computer tapes, program software and other materials

(collectively, “Materials”), prepared by the Manager specifically for the Commission or supplied

by the Commission to the Manager in the performance of the Agreement, shall be the sole and

absolute property of the Commission. To the extent that any Materials relating to the Agreement

developed by or for the Commission embody a copyrightable work, including, but not limited to,

a “compilation” as that term is used in 17 U.S.C. §101, the Commission and the Manager agree

that such copyrightable work(s) shall be considered as one or more “works made for hire” by the

Manager for the Commission, as that term is used in 17 U.S.C. §§101 and 201(b). To the extent

that any Materials relating to the Agreement developed by or for the Manager embody one or

more copyrightable works but are neither a “compilation” nor any other form of “work made for

hire”, the Manager hereby assigns, and agrees to execute instruments evidencing such

assignment, all copyrights in all of such works to the Commission. The Manager shall cause all

Materials developed or produced by the Manager in connection with the Agreement which

embody a copyrightable work to bear the following designation: “© 200 City of Philadelphia”

[complete year of publication in blank line].

(c) The Manager shall make available to the Commission, upon the Commission’s

request, a copy of any Materials prepared by the Manager in performance of the Agreement, at

no cost to the Commission.


(d) Any computer programs, tapes and software developed under the Agreement shall

be compatible with specifications provided by the Commission and subject to the Manager’s

approval.

(e) The Manager hereby grants, and shall require its subcontractors to grant, to the

Commission a royalty-free, nonexclusive and irrevocable right to publish, translate, reproduce,

deliver, perform and authorize others to do so, all Materials not owned by the Commission under

the Agreement but which have been prepared and provided to the Commission solely in

connection with the Agreement; provided, however, that the Manager shall not be required to

grant such right to the Commission with respect to any Materials for which the Manager would

be liable to pay compensation to third parties because of such grant.

(f) During the term of the Agreement and thereafter, except with the prior written

consent of the Commission which may be granted or withheld in the Commission’s sole

discretion, the Manager (or the Manager’s subcontractors, or others under the Manager’s

direction or supervision), will not (i) issue, publish or divulge any information, documents or

data developed or used solely in the performance of the services under this Agreement in any

public statement, thesis, writing, lecture or other verbal or written communication, or (ii)

disclose or use to its advantage or gain, confidential information of any nature acquired from the

Commission or acquired as a result of the Manager’s activities in connection with the Services or

the Agreement. Notwithstanding anything to the contrary herein, the Manager shall be free to

disclose any information (i) to any regulatory authority to which it is subject or otherwise as

required by law or court order, (ii) which is or hereafter becomes ascertainable from public or

published information or trade sources or (iii) required by brokers, dealers or counterparties in

the normal course of engaging in transactions for the Account. The Manager is hereby

authorized to disclose that it has been awarded a contract to provide services to the Commission,

provided that such disclosure is accurate with regard to the size, type, timing and other

circumstances of the contract and its award.

49. REPRESENTATIVE CLIENT LIST

The Commission agrees that the name of the Plan may be included in client lists used by

the Manager for marketing purposes, provided, however, that such name will not be used in any

advertisements or publications without the Commission’s prior written consent.


50. BREACH

In the event the Manager breaches any term of this Agreement, in addition to the

remedies set forth in certain sections herein, the Commission may elect to avail itself of any

combination of remedies, which shall not be exclusive or cumulative, including without

limitation, reimbursement for any funds lost as a result of improper investment, formal letter of

censure, and/or termination of this Agreement.

51. SURVIVAL

Any and all provisions set forth in this Agreement which, by its or their nature, would

reasonably be expected to be performed after the termination of this Agreement shall survive and

be enforceable after such termination. Any and all liabilities, actual or contingent, which shall

have arisen in connection with this Agreement, shall survive any termination of this Agreement.

Any express statement of survival contained in any Paragraph of this Agreement shall not be

construed to affect the survival of any other Paragraph, which shall be determined pursuant to

this Paragraph.

52. COUNTERPARTS

This Agreement may be executed in two or more counterparts, each of which shall be

deemed an original, but all of which together shall constitute one and the same instrument.

[SIGNATURES APPEAR ON NEXT PAGE]


IN WITNESS WHEREOF, intending to be legally bound hereby, the parties have

caused this Agreement to be executed by their duly authorized officers as of the day and year

first above written.

CITY OF PHILADELPHIA, ACTING THROUGH ITS SINKING FUND COMMISSION, ON BEHALF OF THE PHILADELPHIA GAS WORKS PENSION PLAN (Two Signatures Required) BY: BENJAMIN F. GILBERT, Commission Chairman BY: ALAN L. BUTKOVITZ, Commissioner BY: ROB DUBOW, Commissioner [MANAGER FIRM NAME] BY: PRINT NAME: PRINT TITLE:

ATTEST:

PRINT NAME:

PRINT TITLE:


EXHIBIT 1

CITY OF PHILADELPHIA SINKING FUND COMMISSION

AUTHORIZED PERSONNEL

The signatures, names and titles of the personnel authorized to conduct Philadelphia Gas Works Pension Plan business on behalf of the City of Philadelphia Sinking Fund Commission in a decision-making capacity are as follows:

Benjamin F. Gilbert Chairman Sinking Fund Commission

Matthew R. Mazza Executive Director Sinking Fund Commission

Christopher R. DiFusco Chief Investment Officer Philadelphia Gas Works Pension Plan


EXHIBIT 2

[MANAGER NAME]

AUTHORIZED PERSONNEL

The signatures, names and titles of the personnel authorized to conduct business on behalf of [Manager Name] in a decision-making capacity are as follows: PRINT NAME: PRINT NAME: PRINT TITLE: PRINT TITLE: PRINT NAME: PRINT NAME: PRINT TITLE: PRINT TITLE: PRINT NAME: PRINT NAME: PRINT TITLE: PRINT TITLE: PRINT NAME: PRINT NAME: PRINT TITLE: PRINT TITLE: PRINT NAME: PRINT NAME: PRINT TITLE: PRINT TITLE:

Philadelphia Gas works Pension Plan Statement of Investment Guidelines Approved November 12, 2014 Page ii

APPENDIX A-2

STATEMENT OF INVESTMENT GUIDELINES

FOR

PHILADELPHIA GAS WORKS PENSION PLAN

Prepared by:

GALLAGHER FIDUCIARY ADVISORS, LLC 310 Grant Street, Suite 3000

Pittsburgh, PA 15219-2302

412-232-1000

PHILADELPHIA GAS WORKS PENSION PLAN Investment Staff

Two Penn Center Plaza, 16th Floor Philadelphia, PA 19102-1712

215-496-7463

No changes are permitted to this policy without the approval of the Sinking Fund CommissionApproved by the Sinking Fund Commission at its meeting of: November 12, 2014

Philadelphia Gas works Pension Plan Statement of Investment Guidelines Approved November 12, 2014 Page ii

TABLE OF CONTENTS

I. INTRODUCTION .................................................................................................................... 1 A. Goals ............................................................................................................................. 1 B. Liquidity Needs ............................................................................................................. 2 C. Time Horizon ................................................................................................................ 2 D. Investment Style ............................................................................................................ 2 E. Investment Discretion ................................................................................................... 2

II. BACKGROUND ...................................................................................................................... 2

III. RECOMMENDED ASSET ALLOCATION AND DIVERSIFICATION POLICY................ 3 A. Asset Allocation ............................................................................................................ 3 B. Diversification ............................................................................................................... 3

IV. INVESTMENT GUIDELINES AND DEFINITIONS ............................................................. 4 A. Types of Securities ........................................................................................................ 4 B. Diversification ............................................................................................................... 6 C. Quality ........................................................................................................................... 7 D. Duration ........................................................................................................................ 9 E. Prohibited Investments .................................................................................................. 9

V. OBJECTIVES ........................................................................................................................ 10 A. Combined PGWPP Fund ........................................................................................... 10 B. Large-Cap Equity ....................................................................................................... 11 C. Small-Cap Equity ....................................................................................................... 12 D. International Equity .................................................................................................... 13 E. Fixed Income .............................................................................................................. 13

VI. COMMUNICATIONS AND RESPONSIBILITIES ............................................................. 14 A. The Commission ........................................................................................................ 14 B. The Investment Managers .......................................................................................... 15 C. The Custodian ............................................................................................................ 15 D. The Consultant ........................................................................................................... 15

APPENDIX A - Index and Universe Identifications and Definitions...............................................A-1

Philadelphia Gas Works Pension Plan

Statement of Investment Guidelines

Approved November 12, 2014

Page 1

I. INTRODUCTION

This Statement of Investment Guidelines (Guidelines) defines the investment policies, objectives, and procedures applicable to the Philadelphia Gas Works Pension Plan (Fund). It was developed by Gallagher Fiduciary Advisors, LLC (Consultant), in conjunction with the Sinking Fund Commission (Commission) and the Fund.

Experience has shown that the most common and costly error of a fund sponsor is the failure to communicate return expectations, risk tolerances, time horizons, and liquidity needs to the investment managers.

Developing appropriate investment strategies and executing prudent decisions requires a thorough understanding of the Fund's investment objectives. Therefore, it is critical to document these investment preferences. Only through this exercise can the Commission adequately interpret investment activity and results.

The purpose of the Guidelines is threefold. First, it will constitute the program for investing the Fund's assets. Second, it will serve as a communication tool between the Commission and the investment managers. Third, it will provide a framework to measure the ongoing performance of the assets.

Within the constraints imposed by the Guidelines, the investment managers will have total discretion to manage the Fund's assets according to their professional judgment and fiduciary obligations. Their strategies should be communicated to the Commission at regularly scheduled review meetings. By assuming the management of any of the Fund's assets, an investment manager is obligated to manage the assets in accordance with the Guidelines and its contract with the City of Philadelphia acting through the Commission, which contract incorporates by reference the Guidelines.

A. Goals

The long-term goals of the Fund are to:

1. Manage the assets in a manner that is in the best interest of the participants and

beneficiaries of the Fund;

2. Produce investment results which meet the Fund's actuarially assumed rate of return and protect the assets from any erosion of inflation-adjusted value. In addition, the investment managers should prudently invest the assets within the constraints imposed by the Guidelines to enhance value whenever possible; and

3. Produce consistent performance to protect against excessive volatility in the

market value from year to year to be able to meet the liquidity needs of the Fund.




Page 2

B. Liquidity Needs

The Fund should be managed in accordance with its cash flow requirements, as prescribed by applicable law and as discussed in Section II below. The appropriate PGW personnel should communicate the cash flow needs to the Commission's Executive Director and the Fund's Chief Investment Officer (CIO). The CIO, with the support of the Consultant, should then establish the actual distributions of the cash flows (consistent with the long-term asset allocation of the Fund) and communicate such to the investment managers. Furthermore, the distributions of cash flows should consider periodic rebalancing needs due to changes in market valuations of the asset classes.

C. Time Horizon

Progress toward stated goals will be measured regularly, however, the Commission recognizes that the investment managers may require a market cycle (at least three years) to fully implement their investment styles. Under certain circumstances, such as change or loss of key personnel, short-term poor performance history, change of investment style, or pursuant to the Commission's sole discretion, the Commission may choose to consider replacing an investment manager within a three-year time horizon.

D. Investment Style

Each investment manager is directed to implement an investment style consistent with the respective asset class for which they were retained. The Commission will periodically evaluate each manager's investment style to ensure consistency with their mandate. The Commission may consider replacing a manager if it is determined that its investment style is no longer appropriate for the Fund.

E. Investment Discretion

The Commission intends to control such matters as the long-term asset mix and the retention of professional investment managers. However, detailed investment strategies and the ultimate purchases and sales of securities are deemed to be within the expertise and discretion of the professional investment advisors. The Commission is aware that the decision to invest in a commingled account may relieve the investment manager from strict adherence to all elements of the policy. The investment managers do not have the authority to invest in commingled funds without the prior express written permission of the Commission.

II. BACKGROUND

The Commission was initially established to handle all debt servicing of the City of Philadelphia. An ordinance passed by City Council in 1966 delegated management of the Fund to the Commission. The purpose of the Fund is to help meet pension liabilities for the employees of the Philadelphia Gas Works, which pays benefits from a combination of draws from the Fund and current gas revenues.




Page 3

III. RECOMMENDED ASSET ALLOCATION AND DIVERSIFICATION POLICY

Historical performance results and future expectations suggest that common stocks will provide higher total investment returns than fixed-income securities over a long-term investment horizon. However, one can expect an increase in portfolio volatility as the allocation percentage to equities is increased.

Based on the investment goals and risk tolerances stated in this document, given an overall 65% equity / 35% fixed income structure for the Fund, the following asset mix strategies are appropriate. Investments should not exceed the stated minimum and/or maximum levels (at market value) without written permission of the Commission.

Asset Allocation

Range

Asset Class Target Min. Max.

Combined PGWPP Fund

Equity 65% 60% - 70%

Fixed Income 35% 30% - 40%

Cash Equivalents 0% 0% - 10%

TOTAL 100%

Diversification

It is the goal of the Fund to be well diversified. Diversification reduces the risk to the Fund while maintaining the return potential. Consistent with this goal, the equity and fixed-income portfolios will be diversified as follows (percentages based on TOTAL EQUITY + TOTAL FIXED INCOME= 100%):

Asset Class

Target

Range Min. Max.

Equity

Large-Cap Equity (+/- 10%)

41.00%

36.90% - 45.10%

Small Cap (+/- 20%) 9.00% 7.20% - 10.80%

International (+/- 20%) 15.00% 12.00% - 18.00%




Page 4

Asset Class

Target

Range Min. Max.

Fixed Income

Core Plus (+/- 20%)

16.50%

13.20% - 19.80%

Intermediate Plus (+/- 20%) 18.50% 14.80% - 22.20%

TOTAL FUND 100.00%

IV. INVESTMENT GUIDELINES AND DEFINITIONS

Deviations from this Section are prohibited unless specifically approved in advance in writing by the Commission. The Commission may instruct managers to liquidate prohibited investments. Managers shall be liable to the Fund for realized losses in prohibited investments.

A. Types of Securities

1. Domestic Equity includes:

(a) Trust units in commingled investment pools.

(b) Shares in mutual funds.

(c) Separate accounts consisting of:

(i) High-quality U.S. common stocks.

(ii) High-quality U.S. dollar-denominated common stocks of non-U.S. domiciled companies which stocks are traded on a U.S. securities exchange.

(iii) American Depository Receipts (ADRs) of non-U.S. domiciled

companies which ADRs are traded on a U.S. securities exchange.

(iv) Rights and warrants associated with any of the foregoing securities.

(v) Shares or creation units of long-only, unlevered Exchange-Traded Funds (ETFs) traded on a registered securities exchange, which are based on an index of, or basket of, stocks representative of the Manager’s mandate or a subset of the mandate. Examples include HOLDRs (Holding Company Depository Receipts), iShares, Qubes (ticker QQQ, tracks Nasdaq 100), SPDRs (Standard & Poor’s Depository Receipts) and VIPERs (Vanguard Index Participation Receipts).

(vi) Convertible bonds, convertible preferred stocks, preferred stocks

and non- voting stocks if the risk/return characteristics are favorable versus the




Page 5

underlying common equity. Convertible bonds will be considered to be equity investments.

2. Fixed-Income includes:




(i) Marketable debt issues: U.S. Treasury or Agencies. U.S. corporations. U.S. banks or other financial institutions. U.S. mortgage-backed or asset-backed securities. U.S. taxable state and municipal securities. Yankee bonds. U.S. dollar-denominated non-U.S. debt.

(ii) Shares or creation units of long-only, unlevered Exchange-Traded

Funds (ETFs) traded on a registered securities exchange, which are based on an index of, or basket of, fixed income securities representative of the Manager’s mandate or a subset of the mandate. Examples include iShares index funds.

3. Cash Equivalents include:

(a) U.S. Treasury Bills.

(b) U.S. Government repurchase agreements (with a minimum of 102%

collateral).

(c) Money market funds.

(d) Commercial paper.

(e) Shares or creation units of long-only, unlevered Exchange-Traded Funds (ETFs) traded on a registered securities exchange, which are based on an index of, or basket of, U.S. Treasury Bills. Examples include SPDR T-Bill ETFs.




Page 6

4. International Equity includes:




(i) Common stock listed on a registered securities exchange.

(ii) Over-the-counter (OTC) common stock.

(iii) American Depository Receipts (ADRs).

(iv) European Depository Receipts (EDRs).

(v) Global Depository Receipts (GDRs).

(vi) Shares or creation units of long-only, unlevered Exchange-Traded Funds (ETFs) traded on a registered securities exchange, which are based on an index of, or basket of, stocks representative of the Manager’s mandate or a subset of the mandate. Examples include iShares MSCI index funds and SPDRs region and country funds.

(vii) Convertible bonds, preferred stocks, and non-voting stock if the

risk/return characteristics are favorable versus the underlying common equity.

(viii) Currency hedging.

5. Covered Call Options are permissible in separate accounts when the account

holds the underlying security and an equivalent option position is sold to obtain additional income.

6. Futures, and Options other than Covered Call Options, are permissible in

separate accounts for duration and currency hedging purposes only, with prior express written approval of the Commission.

Futures and options may not be used for speculative purposes. The notional value of all future and option contracts is limited to 20% of the underlying market value of the portfolio and under no circumstances is leverage permitted. The counterparty exposure (the total notional value of contracts with any one counterparty which are not subject to two-way collateral agreements) is limited to 5% of the portfolio. Counterparty credit ratings must be rated at least “A” by Standard & Poor’s, Moody’s or Fitch.




Page 7

B. Diversification

Each separate account investment manager must diversify the investment of its allocation to minimize the impact of substantial loss in any specific sector or company.

Domestic Equity -- For each manager’s allocation:

No more than the greater of 20% or three times the applicable benchmark index sector weighting may be invested in any one market sector valued at market, subject to a maximum 45% weighting in any one market sector valued at market.

No more than 10% valued at market may be invested in any one company.

No more than 10% valued at market may be invested in any combination of U.S.

dollar- denominated common stocks or American Depository Receipts (ADRs) of non-U.S. domiciled companies which stocks or ADRs are traded on a U.S. securities exchange.

International Equity -- For each manager’s allocation:

No more than 20% valued at market may be invested in emerging market

securities.

No more than 10% valued at market may be invested in any one company.

Fixed Income -- Each investment manager must diversify the investment of its allocation, within the quality guidelines in Section IV.C. and the duration guidelines in Section IV.D, to

minimize the adverse effects of interest rate fluctuations. Therefore, each manager's allocation is subject to the following limitations:

Except for U.S. Treasury and Agency obligations, no more than 5% valued at

market of a given issuer.

Valued at market, no more than 20% in U.S. dollar-denominated investment grade

non-U.S. debt, excluding Yankee bonds.

Valued at market, no more than 25% in domestic asset-backed securities.

Valued at market, no more than 15% in commercial mortgage-backed securities.

Valued at market, no more than 15 percentage points above the benchmark in

mortgage- backed securities. (Portfolio exposure should include all agency and non-agency securities.)

Valued at market, no more than 15% in non-agency collateralized mortgage

obligations.




Page 8

Valued at market, no more than 15% in non-agency residential mortgage-backed securities.

C. Quality (for Separate Account Managers)

1. Equity Issues

a. There are no qualitative guidelines suggested with regard to domestic equity ratings, rankings, etc., except that prudent standards should be utilized by the investment managers.

b. Convertible bonds (permitted as described in Section IV. A.) will be considered to be equity investments and must be rated investment grade by Moody's (Baa3 or better), Standard & Poor’s (BBB- or better) or Fitch (BBB- or better) and not rated below investment grade by any of Moody's, Standard & Poor's or Fitch (i.e., no split ratings are permitted).

c. Specific constraints include the avoidance of restricted issues which have limited marketability, excluding SEC Rule 144A securities. SEC Rule 144A securities considered by the investment manager to be within the policy guidelines are permitted up to a maximum of 15% of each manager's allocation.

2. Fixed-Income Securities

a. Domestic bonds must be rated investment grade: (1) by at least two of Moody's (Baa3 or better), Standard & Poor’s (BBB- or better) or Fitch (BBB- or better) if the securities are rated by all three agencies; (2) by both agencies if the securities are rated by two of such agencies; and (3) by the agency if the securities are rated by only one of such agencies. Securities which were investment grade at time of purchase and subsequently are downgraded in a manner that they no longer qualify for investment grade status must be disposed of in a prudent manner, unless the Commission or its authorized representative consents, upon recommendation of the manager, to retaining the security in the account.

b. Non-U.S. securities must be rated Aa3 or better by Moody's, AA- or better by

Standard & Poor's and AA- or better by Fitch, on the following conditions: (1) by at least two of such agencies if the securities are rated by all three agencies; (2) by both agencies if the securities are rated by two of such agencies; and (3) by the agency if the securities are rated by only one of such agencies. Non-U.S.securities which met credit quality standards at time of purchase and are subsequently downgraded in a manner that they no longer qualify for investment must be disposed of in a prudent manner, unless the Commission or its authorized representative consents, upon recommendation of the manager, to retaining the security in the account.




Page 9

c. Specific constraints include the avoidance of restricted issues which have limited marketability, excluding SEC Rule 144A securities. SEC Rule 144A securities considered by the investment manager to be within the policy guidelines are permitted up to a maximum of 15% of each manager's allocation.

d. Notwithstanding the credit quality requirements of Paragraphs IV.C.2.a. and b., each Core Plus and Intermediate Plus Fixed Income manager may invest a maximum of 10% of its allocation, valued at market, in any combination of domestic bonds and U. S. dollar-denominated non-U. S. debt securities where the credit rating is below investment grade (less than BBB-). Securities where the credit rating is B- or below are prohibited at the time of purchase. Credit ratings for below investment grade domestic bonds and U. S. dollar-denominated non-U. S. debt securities are determined as follows:(1):by at least two of Moody's, Standard & Poor's and Fitch if the securities are rated by all three agencies; (2) by both agencies if the securities are rated by two of such agencies; and (3) by the agency if the securities are rated by only one of such agencies. Domestic high-yield securities which met credit quality standards at time of purchase and are subsequently downgraded in a manner that they no longer qualify for investment must be disposed of in a prudent manner, unless the Commission or its authorized representative consents, upon recommendation of the manager, to retaining the security in the account.

e. The average market-weighted quality of each manager's allocation exclusive of the provision for below investment grade domestic bonds and U. S. dollar-denominated non-U. S. debt securities in Paragraph IV.C.2.d., should be no less than 3.0, based on the following scale:

U.S. Government and Agencies 5.0Aaa/AAA Bonds 4.0Aa/AA Bonds 3.0A/A Bonds 2.0Baa/BBB Bonds 1.0

3. Cash Equivalent Vehicles -- If commercial paper is used for short-term investments, it must be of high quality, rated at least A-1 by Standard & Poor’s or P-1 by Moody’s.

D. Duration (for Separate Account Managers)

The maturities of the bonds held in each manager's allocation are at the discretion of the investment manager. However, overall effective duration should be maintained within 80% - 120% of the applicable bond index.

E. Prohibited Investments (for Separate Account Managers)

Investment in publicly traded U.S. companies engaged in business activities in Northern Ireland which have not implemented the MacBride Principles. Investment in the following categories of securities are prohibited without the prior express written approval of the Commission:




Page 10

1. Except for International Equity managers: (a) Equity securities which are not U.S. dollar-denominated, (b) equity securities in non-U.S. domiciled companies not traded on a U.S. securities exchange; (c) European Depository Receipts (EDRs); (d) Global Depository Receipts (GDRs); (e) currency hedging.

2. Private placements -- except for SEC Rule 144A securities.

3. Restricted domestic stock.

4. Options and futures -- except for duration and currency hedging purposes

with prior express written Commission approval and covered call options.

5. Commodities.

6. Non-U.S. dollar-denominated fixed income securities. 7. Interest Only (IO) Collateralized Mortgage Obligations (CMOs).

8. Principal Only (PO) CMOs.

9. Z-Tranch CMOs.

10. Structured notes.

11. Floater/Inverse Floater derivative debt securities.

12. Margin trading and leverage.

13. Short selling, including ETFs representing short positions.

14. Collective trusts, except for ETFs as otherwise permitted.

15. Mutual funds including commingled and pooled funds, whether closed-end or open-end, except for open-end ETFs as otherwise permitted.

16. Exchange-traded notes.

17. Oil, gas or natural resource properties.

18. Direct real estate investments.

19. Venture capital.

20. Limited Partnerships.

Investment in any security which these Guidelines do not specifically allow or prohibit must first be approved in writing by the Commission.




Page 11

V. OBJECTIVES

Investment objectives are intended to provide quantifiable benchmarks against which the progress toward long-range investment goals can be measured. The objectives are measured gross of fees over a trailing three-year time horizon. In the case where three years of data does not exist, composite returns of an investment management organization will be used to determine compliance. On an individual investment firm basis, if two of the three objectives are not met, the Commission may consider replacing such firm. Identification of the Indices and Universes used throughout this section are listed in the Appendix.

A. Combined PGWPP Fund

Relative to appropriate indices:

Section Index Objective

Combined PGWPP Fund Combined PGWPP Fund

TMI (Target Market Index)* Actuarial Rate

Exceed by 0.60% Exceed

Combined PGWPP Fund CPI (Consumer Price Index) Exceed by 5.00%

*41.00% Large Cap Domestic Equity/9.00% Small Cap Domestic Equity/ 15.00% International Equity/35% Diversified Fixed Income

Relative to professionally managed accounts:

Section GRID® Universe Objective

Combined PGWPP Fund High Equity Balanced Top

50% Risk (standard deviation) relative to other professionally managed accounts:


Combined PGWPP Fund High Equity Balanced Bottom 50%

B. Large-Cap Equity

1. Large Cap Growth Equity





Page 12


Each Manager Russell 1000 Growth® Exceed by 0.80% Relative to other professionally managed accounts: Section GRID® Universe Objective

Each Manager Growth Equity Top 50% Risk (standard deviation) relative to other professionally managed accounts:


Each Manager Russell 1000 Growth® Exceed Down Market

2. Large Cap Core Equity



Each Manager S&P 500 Exceed by 0.80%

Relative to other managed accounts:


Each Manager Equity Top 50%

Risk (standard deviation) relative to other professionally managed accounts:


Each Manager S&P 500 Down Market Exceed

3. Large Cap Value Equity



Each Manager Russell 1000 Value® Exceed by 0.80% Relative

to other professionally managed accounts:





Page 13

Each Manager Value Equity Top 50%


Section

Each Manager

Index Russell 1000 Value®

Objective

Exceed Down Market

C.

Small-Cap Equity



Growth Manager Russell 2000 Growth® Exceed by 0.90%

Core Manager Russell 2000® Exceed by 0.90%

Value Manager Russell 2000 Value® Exceed by 0.90%

Relative to professionally managed accounts: Section

Growth Manager

Core Manager

Value Manager

GRID® Universe

Small-Cap Growth Equity

Small-Cap Equity

Small-Cap Value Equity

Objective

Top 50%

Top 50%

Top 50%



Growth Manager Russell 2000 Growth®

Down Market

Exceed

Core Manager Russell 2000® Down Market Exceed

Value Manager Russell 2000 Value®

Down Market

Exceed

D.

International Equity



Each Manager MSCI EAFE Exceed by 1.00%

Relative to other professionally managed accounts:




Page 14


Each Manager International Equity Top

50% Risk (standard deviation) relative to other professionally managed accounts:


Each Manager MSCI EAFE Down Market Exceed

E. International Equity - Emerging Markets



Each Manager MSCI Emerging Markets Exceed by 1.00%


Each Manager

Emerging Markets Equity Top 50%



Each Manager MSCI EM Down Market Exceed

F. Fixed Income

1. Core and Core Plus Fixed



BC G/C Manager BC Agg Exceed by 0.25%

BC Agg Plus Manager BC Agg Exceed by

0.50% Relative to other professionally managed accounts:


BC G/C Manager Fixed Income Top 50%




Page 15

BC Agg Plus Manager Fixed Income Plus Top 50%

Risk (standard deviation) relative to other professionally managed

accounts:


BC G/C Manager BC G/C Down Market

Exceed BC Agg Plus Manager BC

Agg Down Market Exceed

2. Intermediate and Intermediate Plus Fixed



Intermediate Manager BC G/C I Exceed by 0.25%

Intermediate Plus Mgr BC Intermediate Aggregate Exceed by 0.50%

Relative to other professionally managed accounts:


Intermediate Manager Intermediate Fixed Top 50%

Intermediate Plus Mgr Intermediate Fixed Plus Top 50% Risk (standard deviation) relative to other professionally managed accounts:

Section Intermediate Manager

Index

BC G/C I Down Market

Objective

Exceed

Intermediate Plus Mgr BC Int Agg Down Market Exceed

VI. COMMUNICATIONS AND RESPONSIBILITIES

The Commission considers the ongoing process of understanding and monitoring the Investment Managers' strategies and performance of primary importance. The following highlights the responsibilities of the Commission, Investment Managers, Custodian and Consultant. Each party should maintain complete, open and timely communications with the Commission at all times.




Page 16

A. The Commission should communicate any changes in the Guidelines to the

Investment Managers, in consultation with the Consultant. Investment personnel, the Commission Executive Director and the Consultant should meet with the Commission quarterly to review the investment activity and performance of the Investment Managers.

B. The Investment Managers are expected to acknowledge the acceptance of the

Guidelines, submit any recommended changes; and attend Commission meetings at least annually or as requested by the Commission to review investment activity and performance. This evaluation should indicate the current portfolio strategy, as well as commentary on the outlook for the economy and capital markets. Investment Managers are given discretionary authority to manage assets of the Fund, however, each Investment Manager is obligated to be in compliance with the Guidelines and its contract with the City of Philadelphia acting through its the Commission.

Additionally, the Investment Managers are required to submit to the Commission and the Consultant monthly reports which should contain a listing of holdings at cost and market value, purchases, sales and monthly returns.

Quarterly reports, in addition to containing the above data, should contain as appropriate, the following:

Equity portfolio characteristics such as number of issues, weighted average and

median market capitalization, price/earnings and book ratios and dividend yield.

Fixed-income portfolio characteristics such as yield-to-maturity, weighted average maturity and effective duration.

Sector weights compared to the appropriate index.

Portfolio statistics such as beta, R-squared, standard deviation and Sharpe ratio.

Investment summary explaining the factors contributing to, or detracting

from performance.

Along with the quarterly reports submitted to the Commission, a report detailing proxy voting and trading using the Fund's directed brokers should be included.




Page 17

C. The Custodian of the Fund is expected to provide monthly and fiscal year end (June 30) statements of portfolio transactions and invested positions by cost and market to both the Commission and the Consultant. Safekeeping of assets will be provided by the Trustee/Custodian.

D. The Consultant to the Fund is expected to provide quarterly reviews of investment

activity and results presented in light of the appropriate standards set forth in the Guidelines, attend and present at quarterly meetings or as requested by the Commission and conduct manager searches as agreed on by the Commission and the Consultant.

APPENDIX A - Index and Universe Identifications and Definitions

Index

Russell 1000® Russell Investments’ market capitalization-weighted domestic equity index

constructed of the 1,000 largest capitalized companies.

Russell 1000 Growth® Domestic equity index constructed of the Russell 1000 Index® stocks

with price-to-book ratios greater than the capitalization-weighted median and higher forecasted growth values.

Russell 1000 Value® Domestic equity index constructed of the Russell 1000 Index® stocks

with price-to-book ratios lower than the capitalization-weighted median and lower forecasted growth values.

S&P 500 Standard & Poor's 500 Composite Stock Price Index. A market

value- weighted index of 500 stocks traded on the NYSE, NYSE Amex Equities and Nasdaq® chosen by S&P as leading companies in leading industries within the U.S. economy.

Russell 2000® Russell Investment’s market capitalization-weighted domestic equity index

constructed from the Russell 3000 Index® of the 3,000 largest capitalized companies, less the Russell 1000 Index® stocks.

Russell 2000 Growth® Domestic equity index constructed from the Russell 2000 Index® stocks

with price-to-book ratios greater than the capitalization-weighted median and higher forecasted growth values.

Russell 2000 Value® Domestic equity index constructed of the Russell 2000 Index® stocks

with price-to-book ratios lower than the capitalization-weighted median and lower forecasted growth values.

EAFE Morgan Stanley Capital International (MSCI) Europe, Australia and Far

East (EAFE) International Equity Index.

MSCI Emerging Markets Morgan Stanley Capital International (MSCI) Emerging Markets

Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.

19

BC Agg Barclays Capital Aggregate Bond Index. Composed of securities from

the Barclays Capital Government/Credit Bond Index, the Barclays Capital Mortgage-Backed Securities Index and the Barclays Capital Asset-Backed Securities Index which are investment grade and meet certain maturity and liquidity constraint (market capitalization) standards.

BC Agg I Barclays Capital Aggregate Intermediate Bond Index. Composed

of securities from the Barclays Capital Aggregate Bond Index having a duration in a defined range which is shorter than that of the Barclays Capital Aggregate Index.

BC G/C Barclays Capital Government/Credit Bond Index. Composed of

securities from the Barclays Capital Government Index (including U.S. Treasury and Agency securities) and the Barclays Capital Credit Index (including corporate and Yankee bonds).

BC G/C I Barclays Capital Government/Credit Intermediate Bond Index. Composed

of securities from the Barclays Capital Government/Credit Bond Index having a duration in a defined range which is shorter than that of the Barclays Capital Government/Credit Bond Index.

CPI Consumer Price Index - All Urban Consumers (CPI-U). Published

monthly by the Bureau of Labor Statistics of the U.S. Department of Labor. Reflects changes in the prices paid by urban consumers for a representative basket of goods and services.

The above index total returns are the benchmarks used for the performance objectives and the down market (risk) constraints. A down market is defined as the cumulative negative quarterly total returns (annualized for cumulative quarterly down markets over one year) for the trailing time period evaluated.

Yanni Partners GRID® (Graphical Ranking of Investment Descriptors) Universe

Equity: The Equity Universe is comprised of those funds with a broad large-cap equity market orientation.

Growth Equity: The Growth Equity Universe is comprised of those funds with a

growth equity orientation.

Value Equity: The Value Equity Universe is comprised of those funds with a

large-cap value equity orientation.

20

Core Equity Balanced: The Core Equity Balanced Universe is comprised of those funds with a 40%

- 60% equity exposure. High Equity Balanced: The High Equity Balanced Universe is comprised of those funds with a 55%

- 75% equity exposure. Small-Cap Equity: The Small-Cap Equity Universe is comprised of those funds with a

small-cap orientation. Small-Cap Growth Equity: The Small-Cap Growth Equity Universe is comprised of those

funds with a small-cap growth orientation.

Small-Cap Value Equity: The Small-Cap Value Equity Universe is comprised of those

funds with a small-cap value orientation.

International Equity: The International Equity Universe is comprised of those funds with

both an international and global, currency hedged and non-currency hedged equity orientation.

Emerging Markets: The Emerging Markets Universe is comprised of those funds that invest

in Emerging International (Non-US) currency hedged and non-hedged equities.

Fixed Income: The Fixed-Income Universe is comprised of those funds with a core

fixed- income orientation.

Fixed Income Plus: The Fixed-Income Universe is comprised of those funds with a core

fixed- income orientation which have the ability to add, on an opportunistic basis, securities having greater risk and greater potential reward.

Intermediate Fixed The Intermediate Fixed-Income Universe is comprised of those

funds with an Income intermediate (10 years or less) duration fixed-income orientation.

Intermediate Fixed The Intermediate Fixed-Income Universe is comprised of those funds with an Income Plus intermediate (10 years or less) duration fixed-income orientation which have the ability to add, on an opportunistic basis, securities having greater risk and greater potential reward.

APPENDIX A-3 SANDY HOOK PRINCIPLES

THE CONTEXT In solemn remembrance of the 20 children and 6 adults whose lives were taken during the tragic shooting massacre of December 14, 2012, at Sandy Hook Elementary School, and in remembrance of too many others who have lost their lives to gun violence before and since, the Sandy Hook Principles are hereby established as one idea that can help make America safer. These Principles are a call to action for corporations to heed the basic core values of American citizens in promoting the health, safety and well-being of our communities. THE PREAMBLE The objective of the Sandy Hook Principles is to encourage positive corporate behavior by gun and ammunition manufacturers, distributors and retailers by establishing a baseline standard for responsible conduct and business practices to help ensure maximum safety for our citizens. Accordingly, the Principles promote progressive actions by these companies towards eliminating the substantial and unjustified risk to human health and life associated with inadequately regulated firearm use. The Principles address five specific categories of reform in terms of procedures, coordination, management, safety and technology. These Principles are created in an effort to work proactively with the gun industry to seek common sense solutions in response to the proliferation of gun violence in America that has caused immeasurable harm to our citizens. Implicit in these Principles lies the belief that adjustments and changes in certain business practices, policies or conduct by the gun industry can improve the health, safety and well-being of our communities. In these Principles, the gun industry is being called upon to be part of the solution to the public safety and public health challenges we face in cities and towns across the nation and presents an opportunity for significant progress towards the imperative objectives of keeping firearms out of the wrong hands, and making guns and ammunition safer for authorized users. It is hereby affirmed that the overwhelming majority of gun owners in America are responsible, law abiding and safety-conscious citizens. Through the widespread adoption of these Principles, an appropriate balance is sought between protecting the rights of gun ownership and the rights of our citizens to be safe and secure. These rights must complement each other. The Principles apply to gun and ammunition manufacturers, distributors and retailers, with an exception for the production and sale of guns or ammunition to local, state and federal law enforcement agencies and all U.S. military forces for use in conducting their official duties. Local and state governments, colleges and universities, hedge funds, pension funds, venture capital funds and all other organizations that have a financial relationship with private corporations may request that companies affiliated with the gun industry review and adopt the Sandy Hook Principles. In the event an affiliated company does not adopt the Principles, organizations may choose to reexamine that financial relationship.

22

THE PRINCIPLES

As a company which endorses the Sandy Hook Principles we will respect the law, and as a responsible corporate member of society we will apply these Principles with integrity consistent with the legitimate role of business. We will develop and implement company policies, procedures, training and internal reporting structures to ensure commitment to these Principles throughout our organization. We believe the application of these Principles will improve the health, safety and well-being of communities across America. Accordingly, we will:

Support and promote restrictions on firearm and ammunition sales, transfers and possession to keep guns out of the hands of children (unless authorized), persons with mental illness or mental health challenges (unless authorized), criminals, domestic or international terrorists and anyone else prohibited from possessing them under federal law.

Conduct background checks on all gun and ammunition sales or transfers and support the establishment of a federal universal background check system for every such transaction.

Reevaluate policies regarding the sale, production, design or conversion of military style assault weapons for use by civilians, including the distribution of any materials/information that may be used to assist in such conversion.

Ensure that all business clients, including gun show operators or gun dealers, conduct background checks for every sale or transfer of guns or ammunition.

Make a commitment to develop, share and implement technology-enhanced safety measures for guns and ammunition.

Support and promote the creation of a federal gun trafficking statute to ensure strict punishment for individuals engaging in the trade of selling firearms to anyone prohibited from possessing them under federal law.

Support and promote sharing of background check and gun sale data for law enforcement purposes.

Support and promote gun safety education at the point of sale and in the communities in which we conduct business operations.

We will be transparent in our implementation of these principles and provide information which demonstrates publicly our commitment to them. The Sandy Hook Principles are modeled after the Global Sullivan Principles - a human rights and equal opportunity code of conduct for companies which was originally developed by the legendary Reverend Dr. Leon H. Sullivan of Philadelphia's Opportunities Industrialization Centers (OIC) of America, in order to promote desegregation and equal rights during the apartheid regime in South Africa.

23

PGW Pension Plan Sandy Hook Principles Covered Companies Airbus Group N.V. Alliant Techsystems Inc. BIG 5 Sporting Goods Corporation Cabela’s Incorporated Colt Defense LLC Compagnie Financiere Richemont, SA Dick’s Sporting Goods, Inc. Forjas Taurus S.A. Howa Machinery, Ltd. IMI PLC Izhevskiy mashzavod OAO Metalico, Inc. Miroku Corporation NOF Corporation Olin Corporation Poongsan Corporation Poongsan Holdings Corporation S&T Holdings Co Ltd S&T Motiv Co., Ltd Smith & Wesson Holding Corporation Sturm Ruger & Co, Inc. The Kroger Co. Tul’skiy Oruzheynyi Zavod OAO Verney Carron SA Wal-Mart Stores, Inc. Xtek Ltd Compliant Companies Daicel Corporation Revised 1/20/2015

24

APPENDIX B-1 CITY OF PHILADELPHIA

OFFICE OF ECONOMIC OPPORTUNITY ANTIDISCRIMINATION POLICY- MINORITY, WOMAN AND DISABLED OWNED

BUSINESS ENTERPRISES FORMS, INSTRUCTIONS AND SPECIAL CONTRACT PROVISIONS

(NON-COMPETITIVELY BID CONTRACTS) Under the authority of Executive Order No. 03-12, the City of Philadelphia has established an antidiscrimination policy (“Policy”) relating to the participation of Minority (MBE), Woman (WBE) and Disabled (DSBE) Owned Business Enterprises in City contracts. Executive Order 03-12 is administered by the City’s Office of Economic Opportunity (“OEO”). The purpose of this Policy is to provide equal opportunity for all businesses and to assure that City funds are not used, directly or indirectly, to promote, reinforce or perpetuate discriminatory practices. The City is committed to fostering an environment in which all businesses are free to participate in business opportunities without the impediments of discrimination and participate in all City contracts on an equitable basis. In accordance with the contracting requirements of the City, the City’s antidiscrimination policy is applicable to this Notice of Contracting Opportunity (hereinafter, “NOCO”).1 For this NOCO, the City has not established ranges for the participation of MBEs, WBEs and/or DSBEs (collectively, “M/W/DSBEs”), but applicant is still required to exercise its Best and Good Faith Efforts to include M/W/DSBEs in its proposal. “Best and Good Faith Efforts” are those efforts, the scope, intensity and appropriateness of which are designed and performed to achieve meaningful participation of M/W/DSBEs in the work described by the NOCO. Applicant’s desire to self-perform all of the work does not excuse applicant from its exercise of Best and Good Faith Efforts. Solicitations and any commitments with M/W/DSBEs shall be designated on the Solicitation For Participation and Commitment Form. The submission of this form and any supporting documentation (more fully discussed below) is an element of responsiveness to the NOCO and failure to submit the required information will result in rejection of your proposal. Applicant hereby verifies that all forms, information and documentation submitted to OEO are true and correct and is notified that the submission of false information by applicant is subject to the penalties of 18 Pa.C.S. §4904 relating to unsworn falsification to authorities which may include payment of a fine of at least $1,000 and a term of imprisonment of not more than two years. Applicant also acknowledges that under 18 Pa.C.S. §4107.2 (a)(4) it is a felony in the third degree, punishable by a term of imprisonment of not more than seven years in addition to the payment of any fines or restitution, if, under any Contract awarded pursuant to this NOCO, applicant fraudulently obtains public moneys reserved for or allocated or available to minority business enterprises or women's business enterprises.

A. M/W/DSBE PARTICIPATION

1.Only firms that are certified by an approved certifying agency2 and identified in the OEO Certification Registry by the time of contract award will be counted for participation. An OEO Certification Registry is maintained by the OEO and is available online at www.phila.gov/OEO/directory. Firms owned and controlled by minority persons, women or disabled persons, which are certified as MBE, WBE, DSBE or DBE by an approved certifying agency may apply to the OEO for listing in its OEO Certification Registry.

1 The term “Notice of Contracting Opportunity,” shortened to the acronym “NOCO,” refers to the City’s contract solicitation documents and information posted on eContract Philly. Generally, these documents take the form of a Request for Proposals (RFP), Request for Qualifications (RFQ) or Request for Expression of Interest (RFI) and include any other document or information (for example, exhibits, appendices) related to the posting of the new contract opportunity. 2 Approved certifying agencies are identified on the OEO webpage found at www.phila.gov/OEO. Applicant is strongly encouraged to search the Pennsylvania Unified Certification Program (“PaUCP”) Directory which offers a robust listing of DBEs; the PaUCP Directory is found at www.paucp.com .

25

2. Participation is counted only if the M/W/DSBE performs a commercially useful function (“CUF”). An M/W/DSBE performs a Commercially Useful Function when it performs a distinct element of a City Contract (as required by the services to be performed in accordance with the NOCO) which is worthy of the dollar amount of the M/W/DSBE’s participant agreement and the M/W/DSBE carries out its responsibilities by managing and supervising the services involved and actually self-performing at least twenty percent (20%) of the services of the participant agreement with its own employees. For suppliers, an M/W/DSBE performs a Commercially Useful Function when it is responsible for sourcing the material, negotiating price, determining quality and quantity, ordering the material and paying for it from its own funds. Commercial usefulness will be evaluated and determined by the OEO on a proposal by proposal basis as informed by prevailing industry standards and the M/W/DSBE’s NAIC codes.

3. In order to maximize opportunities for as many businesses as possible, a firm that is certified in two or more categories (e.g. MBE and WBE and DSBE or WBE and DSBE) will only be counted toward one participation range as either an MBE or WBE or DSBE. The firm will not be counted toward more than one category. Applicants will note with their submission which category, MBE or WBE or DSBE, is submitted for counting. 4. An MBE/WBE/DSBE submitting as the prime applicant is required, like all other applicants, to submit a proposal that is responsive to the Policy. In addition, the participation of an M/W/DSBE partner, as part of a joint venture created for this contract, may be counted only to the extent of the M/W/DSBE partner’s ownership interest in the joint venture in accordance with the following criteria:

• The MBE, WBE or DSBE partner(s) must be identified in the OEO Registry prior to contract award;

• The M/W/DSBE partner(s) must derive substantial benefit from the arrangement; • The M/W/DSBE partner(s) must be substantially involved in all phases of the contract

including planning, staffing and daily management; • The business arrangement must be customary (i.e., each partner shares in the risk and

profits of the joint venture commensurate with their ownership interest, contributes working capital and other resources, etc). 5. M/W/DSBE subcontractors must perform at least twenty percent (20%) of the total amount of work to be performed under the subcontract with their own employees. 6. In listing participation commitments on the Solicitation for Participation and Commitment Form, applicants are required to list a detailed description of the services or supply effort, the dollar amount of the quotation, and percentage of the contract the participation represents. In calculating the percentage amount, applicants may apply the standard mathematical rules in rounding off numbers. The OEO reserves the right to request clarifying information from applicants in the event of an inconsistency or ambiguity in the Solicitation For Participation and Commitment Form. B. RESPONSIVENESS 1. A proposal responsive to the Policy is one which contains documentary evidence of the applicant’s exercise of Best and Good Faith Efforts. The applicant’s Solicitation For Participation and Commitment Form should include evidence of the M/W/DSBEs that have been solicited and any commitments to use M/W/DSBEs in performance of the contract. This form should be submitted with applicant’s proposal but the City, at its sole discretion, may allow applicants to submit or amend the Solicitation For Participation and Commitment Form at any time prior to award. As an expression of Best and Good Faith Efforts, the Solicitation For Participation and Commitment Form must contain the following information:

• Documentation of all solicitations (regardless of whether commitments resulted

therefrom) as well as all commitments made on the enclosed document entitled “Solicitation For Participation and Commitment Form”. Applicants should only make actual solicitations of M/W/DSBEs whose services or materials are within the scope of this NOCO. Mass mailing of a general nature to M/W/DSBEs or similar methods will not be deemed solicitation, but rather will be treated as informational notification only. A reasonable period of time should be given to all solicited firms to ensure that they have sufficient time to adequately prepare their

26

quotes/subproposals. The applicant’s listing of a commitment with an M/W/DSBE constitutes a representation that the applicant has made a legally binding commitment to contract with such firm, upon receipt of a contract award from the City (“Contract Commitment”).

• If the applicant has entered into a joint venture with an MBE, WBE and/or DSBE partner, the applicant is also required to submit along with the Solicitation For Participation and Commitment Form, a document entitled “Joint Venture Eligibility Information Form,” available at OEO, for the City’s review and approval of the joint venture arrangement. 2. In evaluating applicant’s Best and Good Faith Efforts, OEO will review the scope, intensity and appropriateness of these efforts to ascertain whether they could reasonably be expected to achieve meaningful M/W/DSBE participation in this contract. Failure to submit the documentary evidence of Best and Good Faith Efforts will result in rejection of the proposal as nonresponsive, although the City, at its sole discretion, may allow applicants to submit or amend their submission at any time prior to award which may result in revision to applicant’s participation commitments. The submission shall contain and discuss, at a minimum, the following:

• Provide reasons for not committing with any MBE/WBE/DSBEs that submitted a quote/subproposal, regardless of whether the quote/subproposal was solicited by applicant.

• Provide any additional evidence pertinent to applicant's conduct relating to this NOCO including sufficient evidence which demonstrates to the OEO that applicant has not engaged in discriminatory practices in the solicitation of and commitment with contract participants. In describing applicant's efforts to achieve meaningful M/W/DSBE participation, applicant may submit any corroborating documentation (e.g., copies of advertisements for participation).

The applicant's documentary evidence will be reviewed by the OEO to determine whether applicant exercised Best and Good Faith Efforts. Applicant’s expressed desire to self-perform services with its own employees will not excuse applicant from exercising Best and Good Faith Efforts to include M/W/DSBEs in its proposal. OEO’s review will include consideration of the following:

• Whether the applicant's actions were motivated by considerations of race or gender or

disability. The OEO may investigate the applicant's contracting activities and business practices on similar public and private sector contracts. For example, if applicant rejects any M/W/DSBE based on price, applicant must fully document its reasons for the rejection and also demonstrate that applicant subjects non-M/W/DSBEs to the same pricing standards. OEO will investigate whether there was any attempt at good faith negotiation of price.

• Whether M/W/DSBEs were treated as equally as other businesses in the solicitation and commitment process. For example, the OEO will investigate whether M/W/DSBEs are given the same information, access to the plans and requirements of the contract and given adequate amount of time to prepare a quote/subproposal as others who were solicited by applicant. The OEO will also investigate whether M/W/DSBEs were accorded the same level of outreach as non-M/W/DSBEs, for example whether applicant short listed M/W/DSBEs for participation or solicited M/W/DSBEs at any pre-proposal meetings.

• Whether the applicant's contracting decisions were based upon policies which disparately affect M/W/DSBEs. OEO will ascertain whether applicant selected portions of work or material needs consistent with the capacity of available M/W/DSBE subcontractors and suppliers. OEO will consider whether applicant employed policies which facilitate the participation of M/W/DSBEs on City contracts such as segmentation of the contract or prompt payment practices.

3. After review of the applicant’s submission and other information the OEO deems relevant to its evaluation, the OEO will make a written determination that will be forwarded to the awarding City Department.

If the proposal is determined nonresponsive by the OEO, the applicant will be notified and may file a written appeal with the Executive Director of OEO within forty-eight (48) hours of the date of notification; the decision of the Executive Director shall be final.

C. RESPONSIBILITY 1. Upon award, the completed Solicitation For Participation and Commitment Form and accompanying documents regarding solicitation and commitments with MBEs, WBEs and DSBEs become part of the contract and the successful applicant is required to enter into legally binding agreement(s) (“M/W/DSBE Subcontract(s)”) with its

27

M/W/DSBE participants for the services and in the dollar amount(s) and percentage(s) as so committed (the “Contract Commitment(s)”). M/W/DSBE percentage commitments are to be maintained throughout the term of the contract and shall apply to the total contract value (including amendments). Any change in commitment, including but not limited to substitutions for the listed firm(s), changes or reductions in the work and/or listed dollar/percentage amounts, must be pre-approved in writing by the OEO. 2. Unless otherwise specified in the M/W/DSBE Subcontract, the successful applicant shall, within five (5) business days after receipt of a payment from the City for services performed under the contract, deliver to its M/W/DSBE participants, their proportionate share of such payment for services performed (including the supply of materials). In connection with the payment of its M/W/DSBE participants, the successful applicant agrees to fully comply with the City’s payment reporting process which may include the use of electronic payment verification systems. 3. No privity of contract exists between the City and any M/W/DSBE participant identified in any contract resulting from this NOCO. The City does not intend to give or confer upon any such M/W/DSBE participant(s) any legal rights or remedies in connection with the subcontracted services pursuant to Executive Order 03-12 or by reason of any contract resulting from the NOCO except such rights or remedies that the M/W/DSBE subcontractor may seek as a private cause of action under any legally binding contract to which it may be a party. 4. If the OEO determines that the applicant has discriminated against a M/W/DSBE at any time during the term of the contract, the OEO may recommend to the Director of Finance the imposition of sanctions on the applicant including debarment of the applicant from submitting and/or participating in future City contracts for a period of up to three (3) years. D. ACCESS TO INFORMATION

1. The OEO shall have the right to make site visits to the applicant’s place of business and/or job site and obtain documents and information from any applicant, subcontractor, supplier, manufacturer or contract participant that may be required in order to ascertain applicant’s responsiveness and responsibility. 2. Failure to cooperate with the OEO in its review may result in a recommendation to terminate the contract.

28

E. RECORDS AND REPORTS 1. The successful applicant shall maintain all books and records relating to its M/W/DSBE commitments (e.g. copies of quotations, subcontracts, joint venture agreement, correspondence, cancelled checks, invoices, telephone logs) for a period of at least three (3) years following acceptance of final payment from the City. These records shall be made available for inspection by the OEO and/or other appropriate City officials. The successful applicant agrees to submit reports and other documentation to the OEO as deemed necessary by the OEO to ascertain the successful applicant’s fulfillment of its M/W/DSBE commitments. F. REMEDIES

1. The successful applicant’s compliance with the requirements of Executive Order 03-12 is material to the contract. In the event the City determines that the successful applicant has failed to comply with any of the requirements of this Antidiscrimination Policy, including substantial compliance with any Contract Commitment, the City may, in addition to any other rights and remedies it may have under the Contract which includes termination of the Contract, exercise one or more of the following remedies which shall be deemed cumulative and concurrent:

Debar successful applicant from proposing on and/or participating in any future contracts for a maximum period of three (3) years.

Withhold from the contract payment(s) or any part thereof until corrective action is taken.

If corrective action is not taken to the satisfaction of OEO, the City may, without institution of a lawsuit, deduct

money in an amount equal to the M/W/DSBE shortfall which amount shall be collected and considered not as a

penalty but as liquidated damages for the successful applicant’s failure to comply with the contract.

The remedies enumerated above are for the sole benefit of the City and City’s failure to enforce any provision or the City’s indulgence of any non-compliance with any provision hereunder, shall not operate as a waiver of any of the City’s rights in connection with any contract resulting from this NOCO nor shall it give rise to actions by any third parties including identified M/W/DSBE participants.

APPENDIX B-2 City of Philadelphia – Office of Economic Opportunity

Diversity Report of Nonprofit Organizations

1 DEMOGRAPHIC BREAKDOWN OF WORKFORCE

Please provide the following demographic breakdown of your workforce by race/ethnicity/gender/ disability:

#

%

#

%

African American Males Asian/Pacific Islander Females Caucasian Disabled Hispanic Native American Other Total Number of Employees 2 DEMOGRAPHIC BREAKDOWN OF BOARD COMPOSITION

Please provide the following demographic breakdown of your Board of Directors or Trustees by race/ethnicity/gender/disability:

#

%

#

%

African American Males Asian/Pacific Islander Females Caucasian Disabled Hispanic Native American Other Total Number of Directors or Trustees 3 SUPPLIER DIVERSITY

Please check the appropriate box to indicate if you have a supplier diversity policy. If “no,” please explain on your letterhead. Yes No

If you maintain a suppler diversity policy, please attach a copy of your supplier diversity policy. Please identify below, your agency’s five (5) highest minority, woman, and/or disabled owned business suppliers of products or services,

indicating your estimated annual expenditure(s) with the firm:

Company Name Company Address Company Telephone Minority Woman Disabled Annual

Expenditures

1 2 3 4 5 Signature: Date: Non-Profit Name:

APPENDIX C

CITY OF PHILADELPHIA TAX AND REGULATORY

STATUS AND CLEARANCE STATEMENT FOR APPLICANTS

THIS IS A CONFIDENTIAL TAX DOCUMENT NOT FOR PUBLIC DISCLOSURE

This form must be completed and returned with Applicant’s proposal in order for Applicant to be eligible for award of a contract with the City. Failure to return this form will disqualify Applicant’s proposal from further consideration by the contracting department. Please provide the information requested in the table, check the appropriate certification option and sign below:

Applicant Name Contact Name and Title Street Address City, State, Zip Code Phone Number Federal Employer Identification Number or Social Security Number:

Philadelphia Business Income and Receipts Tax Account Number (f/k/a Business Privilege Tax) (if none, state “none”)*

Commercial Activity License Number (f/k/a Business Privilege License) (if none, state “none”)*

____ I certify that the Applicant named above has all required licenses and permits and is current, or has made satisfactory arrangements with the City to become current with respect to the payment of City taxes or other indebtedness owed to the City (including, but not limited to, taxes collected by the City on behalf of the School District of Philadelphia), and is not in violation, or has made satisfactory arrangements to cure any violation, or other regulatory provisions applicable to Applicant contained in the Philadelphia Code. ___ I certify that the Applicant named above does not currently do business, or otherwise have an economic presence in Philadelphia. If Applicant is awarded a contract with the City, it promptly will take all steps necessary to bring it into compliance with the City’s tax and other regulatory requirements. Authorized Signature Date Print Name and Title

* You can apply for a City of Philadelphia Business Income and Receipts Tax Account Number or a Commercial Activity License on line after you have registered your business on the City’s Business Services website located at http://business.phila.gov/Pages/Home.aspx. Click on “Register” or “Register Now” to register your business.

31

APPENDIX D

LOCAL BUSINESS ENTITY OR LOCAL IMPACT CERTIFICATION Instructions: Applicants who seek as a positive factor in the City’s consideration of their application that they meet the Local Business Entity or Local Impact criteria as provided in Mayoral Executive Order No. 04-12 should complete this Certification and return it with their application. Applicants providing this Certification should also include in a separate section of their application labeled “Local Business Entity or Local Impact Certification,” a statement that the Applicant believes it has met the Local Business Entity or Local Impact criteria “as set forth in the attached Local Business Entity or Local Impact Certification.” Check all appropriate certification options that are applicable to Applicant and sign below: Applicant Name: _______________________________________ Local Business Entity Certification ___ I certify that the Applicant named above is a Local Business Entity because Applicant complies with the following criteria set forth in Section 17-109(3)(b) of the Philadelphia Code:

I. During the preceding 12 months, Applicant has filed a Commercial Activity or Business Privilege tax return with the City establishing that Applicant conducted business within the City within the calendar year preceding the filing of the return; and

II. During the preceding 18 months, Applicant:

A. Has continuously maintained a valid Commercial Activity or Business Privilege License and all other licenses and permits necessary to conduct business with the City;

B. Has continuously occupied an office within the City, where business is conducted; and C. Satisfies at least one of the following requirements (Check those applicable to

Applicant): ___ (1) More than half of Applicant’s full-time employees work in the City at

least 60% of the time; ___ (2) More than 50 of Applicant’s full-time employees work in the City at least

60% of the time; or ___ (3) Applicant’s principal place of business is located in the City.

Local Impact Certification ___ I certify that in the performance of a contract resulting from this RFP, the Applicant named above will employ City residents. ___ I certify that in the performance of a contract resulting from this RFP, the Applicant will perform the work in the City. Authorized Signature Date Print Name and Title

32

Exhibit A

Quantitative and Performance Metrics Questionnaire

Firm

Location

Product

Inception Date of Product

AUM of Product

3yr Total Return (NOF)

5yr Total Return (NOF) Inception Date Total Return (NOF)

Fee Quote Performance Based Fee Available?

Alpha

Beta

R Squared

Tracking Error

Upmarket Capture

Downmarket Capture

Turnover Ratio Russell 2000 3 Year Performance Russell 2000 5 Year Performance

Lead Portfolio Manager (Name)

Number of Analysts on Product

When completed the respondents should forward this form to Frank Domesien and Anthony Vu at Gallagher Fiduciary Advisors. Their email addresses are: [email protected] and [email protected]

Due Diligence Questionnaire (“DDQ”) GALLAGHER FIDUCIARY ADVISORS, LLC

DOMESTIC EQUITY INVESTMENT PRODUCT

Please provide complete responses to the following questions as they relate to your investment style. Feel free to include any additional information or analysis beyond what is specifically requested below. Firm Name: Address: Contact Person Name: Phone: Fax: Email Address: Name of Product Benchmark for product I. Organization History and Structure

A. Capital Structure and Ownership

1. Describe your firm’s current capital structure and ownership structure. Also describe the extent to which your firm’s investment professionals hold equity in the firm.

2. Does your firm have any affiliates and/or controlling parties? If so, please

describe. 3. Have there been recent changes in your firm’s ownership? Does your firm

contemplate any changes in ownership within the next 12 months? 4. Please provide us with a copy of your firm’s current Form ADV Part II.

B. Regulatory and Insurance Issues

Gallagher Fiduciary Advisors, DDQ, Page 34

1. Is your firm a registered investment advisor under the Investment Advisors Act

of 1940? 2. Does your firm satisfy the requirements of ERISA Section 3(38), and does it

acknowledge fiduciary responsibility for the management of client accounts in this product?

3. Has your firm or any of its current or past investment professionals ever been the

subject of any litigation; audit or a civil or criminal investigation by the SEC, IRS, or DOL or other regulatory authority; sanctioned by the SEC; convicted of violating any law (federal or state), related to securities, investment management or banking? If yes, please describe the nature of the matter, identify the individuals involved, explain current status or findings and provide a copy of any decision or report. Please also describe any changes to your firm’s internal procedures and/or controls implemented as a result of such proceedings.

4. Has your firm or any of its investment professionals ever been subject to any

investment-related judgments, indictments, or settlements of potential litigation with or without admission of fault, guilt or liability? If yes, please provide a full explanation.

5. Explain whether you comply with the bonding requirements of Section 412 of

ERISA. 6. Please attach a copy of the certificates of insurance for your current investment

counselors’ liability policy (errors and omissions) and fidelity bond (Section 412 of ERISA).

C. Staffing

1. Using the format below, please indicate the number of personnel within each category, firm-wide.

Domestic Equity

Management Other

Products

Total Chief Investment Officer Portfolio Managers Economic Analysts Security Analysts Traders Credit Analysts Administrative Client Service / Marketing Other Total


2. Please provide an organization chart of your firm.

3. For the product requested in this DDQ, is it managed out of more than one office?

4. Identify, using the format below, all investment personnel who joined or left the firm over the past three years, through {6/30/2015}, and indicate whether they were or are involved with managing the domestic equity product.

5. Identify all principle officers, portfolio managers and client service personnel

involved in managing your firm’s domestic equity strategy (using the following format) and highlight the person(s), who would be primarily responsible for the prospective client’s account. Include in your response the bios of each member(s) who would be primarily responsible for the prospective client’s account.

Name Title Total Years

Of Experience Years

with Firm School Degree1

6. Describe the firm’s compensation scheme for investment professionals, including a description of any deferred bonus, profit sharing or equity arrangements. Please be as thorough as possible without being specific as to any individual.

7. Is an individual portfolio manager assigned to each client? If so, how many

accounts is the portfolio manager responsible for overseeing? Have there been changes in the portfolio manager's responsibilities or workload in the last 3 years? If yes, please describe.

1 Most advanced degree only

Name

Title

Product or Area of

Responsibility

Date Left Firm

Date Joined Firm

Reason


8. What plans, if any, does the firm have in place to assure account continuity in the event that a portfolio manager or other investment professionals involved in managing the account leave the firm?

9. How frequently does your firm normally meet with clients? How quickly are

significant firm changes (e.g., personnel, ownership) communicated to clients and consultants? By what method are such changes communicated?

10. Who conducts marketing for your firm, a separate marketing staff or portfolio

managers?

D. Assets Under Management.

1. Please provide information regarding your firm’s total assets under management in

the format below, for the previous five calendar years.

# Accts

$ Amt. (Mil)

# Accts

$ Amt. (Mil)

# Accts

$ Amt. (Mil)

# Accts

$ Amt. (Mil)

# Accts

$ Amt. (Mil)

Total Firm Assets Tax-exempt Taxable

Total

Total Assets by Product Type

Commingled/Mutual Funds

Separate Account

Total

Total Assets by Client Institutional Private Client/Retail

Total

2. Please provide information regarding total assets and number of accounts managed by the firm at {6/30/2015} for each distinct product or investment style in the format below:


Separate Accounts

Commingled/Mutual Funds

Total

Product Asset Class and Style

# of Accts.

Assets ($Mil)

# of Accts.

Assets ($Mil)

# of Accts.

Assets ($Mil)

Domestic Equity

Int’l Equity Domestic Fixed Int’l Fixed

Other (Global, Single Country, Regional, and Emerging Markets)

Total Firm

3. What plans, if any, does the firm have in place to manage its growth in assets under

management? Has the firm established any maximums for firm wide or product assets? Does the specific strategy have a maximum capacity level?

4. Please identify all clients that have terminated accounts firm wide over the past three years. Include type of client (e.g., endowment), market value of account, style of management and reason for termination.

5. Please provide the following information regarding the domestic equity product being

proposed for the previous five calendar years.

# Acct

$ Amt. (Mil)

# Acct

$ Amt. (Mil)

# Acct

$ Amt. (Mil)

# Acct

$ Amt. (Mil)

# Acct

$ Amt. (Mil)

Total product/style assets

Tax-exempt Taxable

Total

Product assets type Commingled Separate account


Total

Product assets by Client

Institutional Private Client/Retail

Total

6. Please provide the following information regarding the five largest clients whose assets are currently invested in the domestic equity product being proposed.

Account Name or Type

Account Value Date Hired

7. Proposed domestic equity product gains and losses for the previous five calendar years :

Gains Losses Year No.

Accounts Market Value No. Accounts Market Value

II. Investment Process

A. Investment Philosophy and Process

1. What is the appropriate benchmark for this style of management?


2. Describe your investment philosophy for managing the domestic equity product or investment style being proposed, and indicate why your firm believes that your investment process will be successful in the future.

3. Describe in detail your investment decision making process. Include in your discussion the

responsibilities of the individuals involved at each step of the investment process, the role of research, how decisions are made to purchase a security for the portfolio, and the portfolio construction process.

4. Describe the research process that supports this style of management. Discuss the relative

importance of internally generated versus external “street” research in your investment process.

5. With the exception of specific client guidelines, do you use a model portfolio for all client

accounts, or do individual portfolio managers have discretion to construct portfolios that are unique to their perspective?

6. Is there an investment committee, and if so, what role does it play in the investment process? How much oversight does the investment committee have over individual portfolio manager decisions?

7. Describe the types of computer software, securities databases and pricing sources utilized as

part of your investment process. Do you use any proprietary analytical programs or models? If so, describe them.

8. What role, if any, do the following play in your investment philosophy and process? Please describe.

i. Top-down economic analysis and forecasting

ii. Bottom-up, fundamental security analysis

iii. Sector analysis and/or sector rotation

iv. Quantitative screening, multi-factor model ranking, risk modeling

v. Earnings or price momentum

vi. Technical analysis

vii. Derivatives

9. What is the maximum account sector overweight or underweight relative to the performance benchmark?


10. Does your investment process have any explicit guidelines related to the maximum individual security position permissible in any client account?

11. Describe your firm’s use of cash in the investment process.

12. How many securities are typically held in the client’s portfolio in this style of management?

What is your firm’s typical holding period for securities purchased? How much security turnover, on average, is there in this account? In the composite?

13. Describe the capitalization and style bias of your portfolio. Are there any limits with regard

to capitalization.

14. Describe your firm’s sell criteria and any override procedures.

15. How is compliance with client guidelines monitored and enforced?

B. Brokerage

1. Describe the extent, if any, of your firm’s use of soft-dollars (or spread rebate for fixed-

income securities), including responding to the following questions. a. List the goods and services your firm "purchases" with soft dollars and provide a

copy of your most recent annual soft dollar budget. b. Which of these goods and services are used to benefit the proposed account?

Describe how. c. How does your firm determine whether or not these goods and services are

adding value to the proposed portfolio? Please be specific. d. Has your firm systematically and regularly evaluated the quality of its trade

executions relative to the level of commissions paid? If yes, explain and be prepared to demonstrate. If no, please describe why not. If your firm’s trading has ever been evaluated by a third party (e.g., Plexus), please provide us a copy of the most recent report describing that study.

e. Are the soft dollars earned with the Client’s assets proportional to the Client’s

assets used in accumulating the soft dollars relative to all assets under management? If yes, please explain how you track this activity and be prepared to share documentation. If no, please describe why not.

f. How much in soft dollars did your firm generate each year for the past 3 calendar

years? g. How much is your average commission per share? Does your firm instruct

broker/dealers to include the commission rate on trade tickets and does your affirmation of the trade details contain commission information?


2. Does your firm trade client accounts through any related or affiliated broker/dealer? If yes,

please describe the nature of the relationship and indicate percentage of trades directed through such affiliate(s).

3. What is your firm’s opinion as to the use of directed brokerage or commission recapture

programs? Would your firm participate in a Client-directed commission recapture or directed brokerage program? If so, what is the maximum percent of the commissions that your firm would direct (a) with and (b) without client direction?

C. Account Characteristics

1. Does your firm provide periodic reports to clients regarding account holdings, investment characteristics and performance? If so, how frequently?

2. Please provide the following portfolio characteristics for the domestic equity product or style being proposed and the product benchmark, {6/30/2015}, as follows:

Composite Benchmark

Price/Earnings Ratio

Price/Book Ratio

Dividend Yield

Median Market Cap

Weighted Avg. Market Cap

Beta

Sectors (fill in as appropriate) Composite Benchmark

Consumer Discretionary

Consumer Staples

Energy

Financials

Health Care

Industrials

Information Technology

Materials


Telecommunication Services

Utilities

3. Capitalization Ranges:

1. Define the cap ranges your firm assigns to Micro, Small, Mid and Large cap stocks.

2. Does your firm’s style allow you weight the portfolio entirely in a single cap range, e.g., small cap; or does the style require your firm to hold stocks across several cap ranges? If yes, define the ranges.

3. How much micro cap will you buy in this style?

4. What is the smallest market capitalization of a company you whose stock you will buy for the portfolio?

4. Capitalization breakdown over the last five calendar years:

% of Portfolio

Micro Small Mid Large Cash Total 100% 100% 100% 100% 100%

5. How frequently does your firm calculate performance for client accounts? Do such calculations segregate equity only returns, fixed-income returns and cash returns? Are your firm’s performance calculations done on a gross and/or net of fee basis?


6. Please provide the following formation regarding the dispersion of account returns within the

composite being presented for the previous five calendar years:

Best Performing Account Worst Performing Account Difference Std. Deviation

7. How does the firm seek to control dispersion of returns among client accounts with

similar investment mandates?

8. For the previous five calendar years (on a year by year basis), please provide attribution analysis for the following criteria: a) sector allocation; b) stock selection

9. Please describe any periods when performance failed to meet expectations and what changes,

if any, were made thereafter to your investment process. 10. Is the client’s account in the composite? Describe how the composite being presented is

constructed including the number of accounts in the composite, total assets and percentage of firm assets represented by the composite, and whether segments of multi-asset accounts (e.g., the equity only portion of balanced accounts) are included in the composite.

11. Does your firm calculate and present account performance in compliance with the CFA

Institute’s Global Investment Performance Standards (if so, please include a copy of the most recent verification report)? If the composite performance presented above is not in compliance with GIPS, please describe why.

12. If the product has targeted levels for absolute or excess return (alpha) and risk or active risk

(tracking error), please describe what those targets are, as well as when and how they were established.

13. Do you target a specific information ratio for the proposed product? 14. Please provide a copy of the most recent marketing presentation for this product. 15. Please provide a copy of the most recent client quarterly report.

D. Other Investment Related Issues

1. Proxy Issues

a. Does your firm vote proxies or has your firm retained another firm to vote the proxies under your firm’s direction? If your firm does not vote the proxies has your firm received permission from clients to retain an outside party to vote proxies? What is the cost of this service and who pays for the service?


b. Does your firm have written policies, voting positions and procedures regarding the voting, recording, and tabulation of proxies? Please forward a copy.

c. Has your firm sent a copy of its most recent policies, voting positions and

procedures to the client?

d. Does your firm annually report its proxy voting record to the client?

e. Does your firm periodically review its position regarding specific proxy issues? 2. Custodial Issues:

a. Does your firm regularly reconcile its record of securities positions and market values with client account custodial statements? If so, please provide a copy of a recent reconciliation. If not, describe why.

b. Does participation in a securities lending program cause your firm any problems?

If yes, please explain.

3. Account Fees and Minimums Please provide your current fee schedules that you charge for the domestic equity product

for all versions of the product (i.e., SMA, commingled fund, mutual fund, etc). Please also provide the minimum investment for each.

4. List all outside service providers (such as auditor, legal counsel, etc.) E. Risk Management

1. Independent Risk Management

a. Does your firm have a risk management and oversight officer? Does that risk

officer operate independently from portfolio managers or other staff members responsible for establishing investment policy? If there is no independent risk manager, how does the firm monitor investment risk?

b. Has your firm ever been subjected to an independent evaluation of its internal

control policies and procedures? If so, please provide a copy. In either case, please highlight your firm’s internal control policies and procedures as they relate to the investment process, including (but not limited to) the following:

portfolio trade processing portfolio accounting and reconciliation compliance with firm and client specified investment guidelines

c. Does your firm have a written ethics policy and personal securities compliance

guidelines for employees? Describe what steps your firm takes in order to eliminate


possible conflicts of interest between client portfolios and securities transactions by the firm and/or its personnel.

d. How are exceptions to a client’s investment guidelines identified? If such

exceptions are identified, to whom are they reported internally and what are the procedures for detecting and reversing non-compliant trades? Does your firm have formal audit and reconciliation procedures to monitor compliance with written policies and regulatory requirements?

small cap index rfp - fin news€¦ · i. project overview a. introduction; statement of purpose...

Documents